Preamble

The House met at half-past Two o'clock

PRAYERS

[MADAM SPEAKER in the Chair]

PRIVATE BUSINESS

CITY OF WESTMINSTER BILL [Lords] (By Order)

Order for consideration, as amended, read.
To be considered on Thursday 18 May

Oral Answers to Questions — TREASURY

Domestic Economy

Mr. Gapes: To ask the Chancellor of the Exchequer if he will make a statement on prospects for improvement in the state of the domestic economy. [22225]

The Chancellor of the Exchequer (Mr. Kenneth Clarke): The outlook remains highly favourable. The economy grew by nearly 4 per cent. last year and inflation was at its lowest level for over 30 years.

Mr. Gapes: If the outlook is really favourable, why did we have a £10.5 billion deficit on trade in 1994, why has the pound devalued by 35 per cent. since the Prime Minister took us into the exchange rate mechanism at DM2.95 and why is the weakness of our economy being reflected by a weakening of our currency, day by day?

Mr. Clarke: First, our trade performance continues to improve. The hon. Gentleman will know that this morning's trade figures show exports up by 9 per cent. in volume compared with a year ago and he will also know that the current account last year was extremely favourable despite the strong recovery. We even showed a surplus in our dealings with Japan last year. The hon. Gentleman's sudden concern about the exchange rate is very reassuring. He will be glad to know that we are strengthening against the deutschmark today.

Mr. John Townend: Does my right hon. and learned Friend accept that the unemployed, small business, the construction industry, many of the service industries and much of the retail trade are relieved and grateful that he did not put up interest rates? Will he confirm that the grounds for that decision were purely economic and based on factors such as low wage inflation, the flat housing market and the quarterly survey by the Forum of Private Business showing that for the past four quarters the rate of growth had gone down? Will he confirm that if inflationary pressures rise he would have no hesitation in putting up interest rates?

Mr. Clarke: I confirm all those things. As my hon. Friend says, small businesses in particular want stability

and certainty in the Government's policy. We are pursuing steady recovery with low inflation and every policy action that I take is aimed at that conclusion. I congratulate my hon. Friend on expressing an opinion on the decision that I took on Friday. Nobody in the Labour party has yet seemed to have formed an opinion one way or the other as to whether the decision was welcome.

Mr. Sheldon: Is the Chancellor of the Exchequer aware that no Government can allow the Governor of the Bank of England to determine economic policy in this country? The Government, of whatever party, must determine such matters, and they are judged right or wrong by the events as they unfold.

Mr. Clarke: I do not know why the right hon. Gentleman should tell me that. His own shadow Chancellor needs to be told that. Everybody will discover in six weeks' time in the usual way the opinion of the Governor and myself at last week's meeting. Everyone can see from the Governor's speech this morning that the Governor of the Bank of England and I are entirely agreed on the object of policy and we believe that that policy has been delivered successfully.
The hon. Member for Dunfermline, East (Mr. Brown), the shadow Chancellor, has now got the monthly monetary report and the Governor's own inflation report; he has seen the judgment of the markets; he has heard every financial commentator give an opinion and he has heard my hon. Friend the Member for Bridlington (Mr. Townend) give an opinion, yet he has no opinion at all on the subject one way or the other. The shadow Chancellor does not even cast a shadow one way or the other. He would just wait to see what the Governor told him to do.

Mr. Renton: Has my right hon. and learned Friend had time in his busy morning to read an article in today's edition of The Times headed
Three cheers for Clarke, the best post-Jenkins Chancellor"?
Is he aware that Mr. Kaletsky, the author of the article, congratulates him on being his own man in standing up against the City and the Bank of England and their pressure for higher interest rates?
Is my right hon. and learned Friend also aware that many of his hon. Friends would disagree with Mr. Kaletsky's conclusion that he should become President of the European Commission, but expect him to remain as an extremely successful Chancellor for many years, leading and guiding the improvement in the economy of the country?

Mr. Clarke: I read the article and I am, of course, grateful to Mr. Kaletsky and to my right hon. Friend. I have no aspirations to be President of the European Commission.

Mr. Budgen: Yet.

Mr. Clarke: I am unlikely to be put forward for that post by my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen).
One thing with which all my critics have always agreed, as much as my supporters, is that I endeavour to be my own man. I take my own decisions. I am extremely candid


and clear about why I have taken those decisions. I am faced by an opponent who has no opinions and no decision-taking capacity on the subject.

Mr. Malcolm Bruce: Does the Chancellor agree with the Governor of the Bank of England and the chief economist of the Bank of England that interest rates will have to rise sooner rather than later? Is he still serious about keeping inflation under 2.5 per cent. by the end of this Parliament?

Mr. Clarke: I shall set interest rates, as I have always said I shall set them, after discussion with the Governor of the Bank of England, to pursue the objective upon which we are both agreed of keeping inflation between the 1 to 4 per cent. range and getting it under the lower half by the end of the Parliament. I shall continue to do that.
If the hon. Gentleman wants to know the opinion of the Governor on that, he will know that he made a speech in Aberdeen this morning in which he said:
Notwithstanding the current excitements, I am convinced we remain in better economic shape than we have been for a very long time. The Chancellor has made it clear that the macro economic policies that have brought us to this point remain in place—and it is important, from my perspective, that they should.
I agree with that. I do not know whether the hon. Gentleman agrees with that, and I have not a clue whether the hon. Member for Dunfermline, East agrees.

Mr. Gordon Brown: Will the Chancellor answer the question put to him just a minute ago? The Bank of England said this morning that under the present policies, the Government's last remaining target—an inflation target of 2.5 per cent. by the end of the Parliament—will not be met. [Interruption.] That is what the Bank of England said this morning. Will the Chancellor now reaffirm in clear words that the inflation target of 2.5 per cent. by the end of the Parliament will not be changed?

Mr. Clarke: I have just said that it will not be changed. There has been no change of policy. What the Bank of England's inflation report this morning says is that it has revised its forecast up slightly because of recent changes in the exchange rate. It stresses that the certainties about inflation are vague—it does not give a spot figure. We will continue to set interest rates to achieve the target that I have given. That is a clear policy.
If the hon. Gentleman believes that forecasts of inflation are cast in concrete, he is mistaken. If he wants a guide to policy, he should not just look at one forecast of inflation, but look at the commitment of the Government and the Governor to low inflation and the fact that, in the past 19 months, we have produced the best inflation record the country has seen since 1961.

Mr. Nicholas Winterton: May I congratulate my right hon. and learned Friend on his courage last week in not putting up interest rates? He knows my views about the importance to the country of the manufacturing and construction industries. Does he accept that a real guide to the true economic strength of the country is the strength of construction and manufacturing? If they are doing well, all the other indicators are, in my view, irrelevant. Would he comment on that?

Mr. Clarke: Much as I would love to agree with every word of my hon. Friend, in the end he underestimates

the complexity of delivering sustained recovery with low inflation, which has eluded the country ever since the war. We now have the best prospects of achieving that. The present recovery is being led by manufacturing and our export performance with the outside world is particularly encouraging, because we are rebalancing the economy in a much healthier fashion.
I am glad that my hon. Friend considers my decision courageous, because it is exactly the same type of decision as those I have taken for the past two years. We are pursuing a consistent policy to give manufacturers and others the stability that they require and the certainty they need about the way in which the Government intend to take economic policy.

Mortgage Interest Relief at Source

Mr. Fraser: To ask the Chancellor of the Exchequer if he will make it his policy that an unmarried couple owning a house and who have jointly borrowed £60,000 or more are not penalised in terms of MIRAS. [22226]

The Financial Secretary to the Treasury (Sir George Young): Since 1 August 1988, mortgage interest relief has been restricted to a loan of £30,000 per residence, regardless of the number or marital status of the people buying together. That rule ensures that married and unmarried couples are treated in the same way. Unmarried people buying a house together before 1 August 1988 can keep any higher level of relief to which they were entitled, as long as their circumstances do not change. However, if they move, replace the loan, or marry, their limit for relief falls to £30,000 between them.

Mr. Fraser: Does that mean that, if an unmarried couple who bought their house before 1988 get married, the Government put a tax on marriage and legitimacy? Surely that is not Government policy. Is it not about time that the law was changed, so that those cohabitees who do marry do not suffer a tax penalty?

Sir George Young: The law was changed to remove exactly the injustice to which the hon. Gentleman refers, because, under the old rules, an unmarried couple could obtain as much as twice the amount of mortgage interest tax relief as a married couple. That was the injustice that we removed in 1988. We also gave transitional relief to those who had bought under the old rules, until such time as their circumstances changed.
If we were to do what I believe that the hon. Gentleman wants us to do, we would simply continue to entrench an injustice that Conservative Members, at least, find unacceptable.

Mr. Devlin: Surely it is right that married couples should be in no worse a position than unmarried couples, and therefore the restriction that took place in 1988 was perfectly just and well thought out. In fact, we should have done it earlier.

Sir George Young: I agree with my hon. Friend, and I find it perverse that a decision that we took in 1988, which I am not aware was criticised by Opposition Members at the time, has now come in for rather belated criticism from the hon. Member for Norwood (Mr. Fraser).

Privatisation

Mr. Clifton-Brown: To ask the Chancellor of the Exchequer what was the effect on the Exchequer in the last financial year of industries privatised since 1979; and what was their effect in 1979. [22227]

Mr. Kenneth Clarke: In 1979, nationalised industries cost the taxpayer about £50 million each week. In 1994–95, privatised companies paid about £55 million each week into the Exchequer.

Mr. Clifton-Brown: Does my right hon. and learned Friend agree that those figures demonstrate the outstanding success of our privatisation policy, which has been widely recognised throughout the world by such regimes as North Korea and Cuba? Does he not find it strange that the last bastion of socialism, the new Labour party, has yet to appreciate the effects of privatisation?

Mr. Clarke: I agree with my hon. Friend. The Labour party held a special conference to try to pretend that it no longer agreed with the North Korean communists, but only a week later, when the first privatisation proposition came before Parliament, it was opposing it again and backing the keeping of nuclear fuel in state-owned hands, in spite of the fact that privatisation will bring a dramatic fall in electricity prices in England, Scotland and, indeed, all parts of the United Kingdom.

Ms Armstrong: Does the Chancellor recognise that the Treasury will make about £5 billion from the two privatisations that the Government are pursuing—£5 billion for tax cuts before the general election, which will have to be paid for by the British people to the tune of £10 billion in the costs of decommissioning power stations and subsidies to British Rail? What sort of bargain is that for the taxpayer?

Mr. Clarke: The hon. Lady has at least worked out that the proposal to privatise the nuclear electricity industry has nothing to do with tax cuts. It has to do with putting in place commercial disciplines and private sector management, which those in the industry want, and reducing the costs of electricity to consumers throughout the country. That is the purpose of the privatisation.
If it has become the policy of the Labour party to seek tax cuts—I have no knowledge of the direction in which it intends to go in that regard—tax cuts depend on tight control of public spending and the reduction of public borrowing. If the Labour party ever gets round to having an economic policy, perhaps Labour Members will give us the benefit of some of their opinions about some of those elements—tax, spending and borrowing.

Mr. Alan Howarth: Does my right hon. and learned Friend agree that the capacity of the privatised and other industries to invest and deliver wealth to the nation, jobs to our people and revenue to the Exchequer depends critically upon the level of interest rates? Does he agree that choking off investment every time we fear a tremor of inflation is a formula for the progressive debilitation of our economy?

Mr. Clarke: That is right, but I am sure that my hon. Friend also agrees that inflation has killed off fast recovery and poses the biggest threat to the confidence that people must feel before they will invest in increasing industrial capacity. That is why we make the judgments

we do on the basis of a clear inflation target. That is why we look at the real economy, as well as the monetary aggregates and the exchange rate, when we make those decisions. I believe—judging from his speech today, the Governor believes it also—that we have been remarkably successful in getting the right balance over the past two or three years.

Drugs

Mr. Dalyell: To ask the Chancellor of the Exchequer what currently available figures he has for the quantities and value of drugs seized at United Kingdom airports over any conveniently available recent 12-month period. [22228]

The Paymaster General (Mr. David Heathcoat-Amory): During 1994 Customs and Excise seized 47 tonnes of cannabis and four tonnes of cocaine, heroin and synthetic drugs, with a total street value of some £551 million. Some 10½ per cent. by value of these drugs were seized at airports.

Mr. Dalyell: May I ask a question of which I have given Treasury officials notice? Could they put in the Library an account of what a senior Customs official, Mr. Philip Connolly—whom I do not criticise in any way—said to senior Pan American airways security officers Michael Jones and Jim Berwick about controlled drugs delivery? Will the Minister consider asking a senior Treasury official to watch carefully the two-hour film about Lockerbie which is to be screened tonight on Channel 4? The significance or otherwise of my question will then become apparent.

Mr. Heathcoat-Amory: The hon. Gentleman did me the courtesy of giving me notice of his intention to raise the Lockerbie case. A British Customs officer did give information to an American court about the Lockerbie bombing, and confirmed that bag-switching is a technique used by drug smuggling organisations. However, there is no evidence that that was the way in which the bomb was put on the flight in question; nor were British Customs involved in any controlled delivery of drugs on that ill-fated flight. I shall ask my officials to watch the programme to be screened this evening, and I will supply any additional information to the hon. Gentleman.

Mr. Allason: Will my hon. Friend agree to look at the Treasury's policy relating to foreign rewards paid to British police forces for drugs seizures overseas? Is he aware that the Drug Enforcement Administration is prepared to pay very large sums in return for information that leads to drug seizures abroad? Under Treasury rules, all of that money must go directly to the Exchequer whereas, under DEA rules, the money must go directly to the drug squads involved. Therefore, Britain is denying itself large sums of money that would be available from the United States in the fight against drugs.

Mr. Heathcoat-Amory: I am not sure whether my hon. Friend is quite correct in what he says. The proceeds of international drugs seizures can be recycled to drug enforcement agencies, including those in this country. I will obtain the details and write to my hon. Friend about the matter.

Financial Supervision

Mr. Corbett: To ask the Chancellor of the Exchequer what new proposals he is considering on banking and financial supervision. [22229]

Mr. Kenneth Clarke: Banking and financial supervision is a large subject. Therefore, with respect, this is a rather wide question. At any one time a variety of issues will be under consideration. For example, my hon. Friend the Minister of State announced at the beginning of the year the outcome of our review of the Building Societies Act 1986 and, more recently, the Treasury released a consultation paper on open-ended investment companies with proposals for legislation to allow their formation in the United Kingdom.

Mr. Corbett: I thank the Chancellor for that answer. Does he accept that, following the rip-off of people on modest incomes who were persuaded to buy private pensions and mortgage-linked endowment policies, there is a need for more effective regulation of banking and financial services; or will those people simply become more casualties of the Government's indifference?

Mr. Clarke: The response to the problems that have arisen with personal pensions shows how successful we are in having the right regulatory regime in place, and how responsive the authorities have been in making sure that individuals who might have suffered loss as a result of mis-selling are considered. We are going through a huge process of identifying any persons who may have experienced mis-selling of personal pensions and of making sure that those responsible put such people in the position in which they should be. Similarly, we already cover endowment-based mortgages under the Financial Services Act 1986.
Strong arrangements are in place to provide consumer protection. It is not the right response to demand yet another quango and more Acts of Parliament—particularly when the present arrangements in this country work so much better than anything almost anywhere in the world.

Mr. Budgen: As banking is affected by monetary policy, I congratulate my right hon. and learned Friend on not having increased interest rates, for two reasons. At long last, he understands the advantages of floating exchange rates, and he demonstrates that, under our constitution, the Chancellor of the Exchequer must be responsible for monetary policy and that it cannot be delegated to an independent Bank of England or, worst of all, to an independent central European bank.

Mr. Clarke: My hon. Friend and I have always agreed on rather more of economic policy than he ever cares to concede. I do know that one has either a floating exchange rate or a fixed exchange rate, and that one should not have a target exchange rate when it is floating. The exchange rate is something that one takes into account when setting monetary policy. My hon. Friend gave an impeccable statement of the constitutional position when he said that the Chancellor is responsible for monetary policy in this country but acts on the advice of the Governor of the Bank of England. I have made matters more open than ever before, by allowing the Bank of England to publish an unedited inflation report and by publishing the minutes

of meetings after six weeks, to give it more credibility with people, such as my hon. Friend and myself, who want to see such decisions taken on economic grounds.
I congratulate my hon. Friend on yet again giving an opinion one way or the other about last week's decision. The hon. Member for Dunfermline, East (Mr. Brown) had one chance to do so, but he went on about something that I have already forgotten. The hon. Gentleman failed absolutely to be the first member of the Labour party to say whether he would have increased interest rates, taken them down or done anything at all last Friday.

Rev. Martin Smyth: While I welcome the Chancellor's statement that he does not want any more quangos, does he agree that it is time that the Treasury relaxed some restrictions on friendly societies, to allow them to give more benefits to their members, whom they have been looking after well for years?

Mr. Clarke: That matter has been reviewed from time to time and we consider representations on the subject. We think that there is some scope for change.

Mr. Brazier: Surely the most important purpose of banking supervision is to keep an eye on the overall level of lending and the money supply. Will my right hon. and learned Friend take it from me that many on this side of the House believe that when broad money is in the lower half of our range, 80 per cent. of bank lending to small businesses is secured on domestic property and there is still strong anecdotal evidence of tightness of credit in the economy, my right hon. and learned Friend is absolutely right to resist pressure to raise interest rates?

Mr. Clarke: My hon. Friend is right. Broad money as well as narrow money, which has remained above its target range for some time, are two of the items that one considers. I repeat my congratulations to my hon. Friend. He gave an opinion that may provoke a response, but the entire Labour party is sitting there like a stuffed duck because Labour Members do not know whether they are meant to get up and say that they agree or do not agree with last Friday, because the man in front of them has not yet made up his mind. He is incapable of making up his mind on any aspect of economic policy.

Mr. Darling: I ask the Chancellor to return to the original question. Does he accept that pensions being mis-sold or people being given inappropriate advice about endowment mortgages is due in no small part to the fact that we live under a regime of self-regulation, where the public interest takes second place to the trade interest? Does he accept that public confidence in the industry will not be restored until the nonsense of self-regulation is brought to an end?

Mr. Clarke: With the greatest respect, I do not agree that that case is made out at all. The statutory framework that we have is set under the Financial Service Act 1986. There is no evidence that making the whole regime statutory would improve a system in which the self-regulatory bodies contain a large number of people with detailed experience of how the industry works.
Of course, we have to look at the serious problems that lie behind the mis-selling of so many personal pensions. I am confident that the new Personal Investment Authority will improve matters and exercise tighter


supervision. I am delighted that more than 5,000 firms have applied to join that authority, and I am sure they will strive to obtain higher standards in future.

Public Borrowing

Dr. Spink: To ask the Chancellor of the Exchequer what was the reduction in public borrowing (a) in the United Kingdom and (b) in other EU countries in the last year. [22230]

Mr. Kenneth Clarke: The public sector borrowing requirement for 1994–95, was £10 billion lower than in the year before. Government borrowing is falling faster, here in the United Kingdom, than in any other major European economy.
With permission Madam Speaker, I will publish the detailed information requested on other countries in the Official Report.

Dr. Spink: Does my right hon. Friend agree that paying taxes is fundamental to keeping down the public sector borrowing requirement and to the financial well-being of everyone in the country? Will he therefore join me in deploring the fact that some of the newly elected Labour councillors on Castle Point borough council are facing committal proceedings—

Madam Speaker: Order. That is hardly the responsibility of the Chancellor of the Exchequer. Much as I am devoted to Castle Point, I doubt whether the Chancellor has any responsibility for activities there.

Dr. Spink: What would happen to the public sector borrowing requirement if, like the Labour councillors in Castle Point, the rest of us refused to pay our local taxes, as has Jim David of Canvey Island on Castle Point?

Mr. Clarke: I believe that all citizens should pay the taxes to which they are legally liable, properly and on time. I also believe that taxation should be kept down to the lowest possible level consistent with the public spending required to provide good high-quality services.

Mr. Enright: Will the Chancellor compare and contrast the differing definitions of public sector borrowing in different countries in the European Union?

Mr. Clarke: It is a perfectly fair point, and it is done as part of monitoring the convergence criteria under present arrangements within the European Union. Attempts are made to compare like with like across the European Union. We follow international definitions. The conventions that we follow are recognised to be in line with the best of international practice, and the PSBR figures that we produce are trustworthy and reliable, and show what remarkably good progress we are making in getting our public sector borrowing under control, in contrast to the total failure of the last Labour Government to deal with the public sector borrowing problems following recession when the International Monetary Fund eventually had to sort them out.

Mr. Tim Smith: Does my right hon. and learned Friend agree with the European Monetary Institute that continuous efforts towards reducing—[HON. MEMBERS: "Reading."] I am quoting. [Interruption.] I am paraphrasing. Does my right hon. and learned Friend agree that continuous efforts towards public sector borrowing are needed if we are to have a growing

economy and improve the supply side? Is it not the case that most European Governments are overspent and over-borrowed and that only the British Government have a clear programme for reducing spending and borrowing as a percentage of national income?

Mr. Clarke: My hon. Friend is right. There is a growing international consensus that in current circumstances a low level of fiscal deficits, low inflation and low debt to gross domestic product ratios are essential to keep an economy on course. That is wholly consistent with the policy of the Conservative party over the years. All the members of the European Union are committed to achieving those goals. As I have just said, Britain is reaching them rather faster than any of the major economies on the continent.
Following is the table:


Changes in general government financial deficit (GGFD) (as a percentage of GDP)



1Year-on-year change in GGFD/GDP ratio


Austria
+0.3


Belgium
-1.1


Denmark
-0.1


Finland
-2.5


France
-0.2


Germany
-0.4


Greece
+0.8


Ireland
-0.1


Italy
+0.1


Luxembourg
-0.2


Netherlands
+0.5


Portugal
-1.0


Spain
-0.5


Sweden
-1.6


United Kingdom
-1.9


1 1994–95 compared with 1993–94 for United Kingdom 1994 compared with 1993 for other EU.


Sources: United Kingdom, 1 March 1995 excessive deficits return; other EU, European Commission forecasts, European Economy November 1994.

Public Sector Borrowing Requirement

Mr. Connarty: To ask the Chancellor of the Exchequer what is the latest estimate of the Public Sector Borrowing Requirement for the present Budget year; and if he will make a statement. [22231]

Mr. Nigel Griffiths: To ask the Chancellor of the Exchequer if he will give his latest estimate of the public sector borrowing requirement. [22232]

The Chief Secretary to the Treasury (Mr. Jonathan Aitken): The Budget forecast of the PSBR for 1995–96 was £21½ billion.

Mr. Connarty: Given that the Bank of England is now calling into doubt the Chancellor's inflation forecast, and that the PSBR outturn was £1.3 billion more in 1994–95 than predicted, how can the British people be asked to have confidence in the Chancellor's predictions for the economy when he is turning into the Michael Fish of Budget forecasting?

Mr. Aitken: The hon. Gentleman is in danger of misrepresenting the views of the Governor, who clearly said today that we are


in better economic shape than we have been for a very long time.
I hope that the hon. Gentleman will at least acknowledge that the public sector borrowing requirement has been on a good downward trend for some time. It fell by £10 billion last year and is forecast to fall by £14 billion this year.

Mr. Griffiths: Does the Minister accept that the PSBR is being reduced only by imposing more Tory taxes? The latest—the transport tax, which is to take effect from 1 January next year and will add £10 each to some 12 million holidays—is the 21st Tory tax. Why does the Minister not listen to businesses and ensure that those proposals are withdrawn?

Mr. Aitken: The hon. Gentleman ignores the fact that one of the main reasons why the PSBR is falling at a satisfactory rate is that my right hon. and learned Friend and I managed to reduce public spending over the survey period by no less than £29 billion. That is a major contribution to bringing down the PSBR.

Mr. Nicholls: What representations has my right hon. Friend had from the Opposition about the need to reduce public expenditure—bearing in mind that their claim to be elected is now based on the fact that they can be safely elected because they are Tories as well?

Mr. Aitken: My right hon. and learned Friend the Chancellor referred a few moments ago to Opposition Front Benchers as a lot of silent stuffed ducks. That strange characteristic is repeated exactly in the case of my hon. Friend's point about public spending. The Opposition will not tell us whether they want lower public borrowing or what they intend to do about public spending. Away from the Dispatch Box, however, they are still the big-spending party: currently promising to spend more money on income support for 16 and 17-year-olds, on regional assemblies and development agencies, on an emergency employment programme, and on a defence conversion agency, more money from capital receipts, and more money on a growth strategy for Europe. All that adds up to much more borrowing and higher spending. It is about time that they stopped being stuffed ducks and admitted it.

Mr. Batiste: Does my right hon. Friend agree that reductions in public borrowing create resources which can be made available for other purposes? As the Opposition have called repeatedly for increased spending on education and hospitals, can my right hon. Friend think of any recent occasion when they have offered support for creating the economic circumstances that will make that possible?

Mr. Aitken: I can think of no such example. I have listened to wave after wave of sound bite waffle emanating from the Opposition, and I am longing to hear a single constructive fact or proposal from them. They have indeed been well named the stuffed duck Front Bench by my right hon. and learned Friend the Chancellor.

Mr. Mike O'Brien: Will the Minister confirm that, in 1994, public borrowing as a percentage of gross domestic product was higher in the United Kingdom than in any other European Union country, with the exception of Italy, Greece and Spain? Will he further confirm that that imprudent situation was dealt with only by the Government imposing on the typical British family extra taxes of £800, in breach of the Government's election promises?

Mr. Aitken: The hon. Gentleman draws a one-sided and erroneous picture. In fact, the British Government's borrowing is falling faster than that of any other major European country. Among European Union countries, we have the lowest general Government debt-to-GDP ratio, with the exception of Luxembourg. So our record on public borrowing is good by European standards.

Economic Performance

Mr. Spring: To ask the Chancellor of the Exchequer what representations he has received from the editor of the Financial Times about Britain's economic performance and that of the rest of Europe. [22233]

Mr. Aitken: My right hon. and learned Friend and I are regular readers of the Financial Times.

Mr. Spring: Is my right hon. Friend aware that, according to the latest Financial Times survey of Europe's 500 largest companies, the United Kingdom accounts for no fewer than 16 of the top 25 by profitability, and no fewer than 11 of that 25 by market capitalisation? Does my right hon. Friend agree that that is yet another sign of the growing resilience and success of British business?

Mr. Aitken: Yes, I agree with my hon. Friend. He is right to draw attention to that upbeat Financial Times survey, which showed that British companies are riding high in the European league table of successful businesses. In addition to the figures to which he has drawn attention in terms of profitability and market capitalisation, six British companies are in the Financial Times top 10, 21 in the top 50 and no fewer than 179 in the top 500. That is three times more than the German score and twice that of the French. The figures show that British companies are exporting more and growing faster round the world than most of our European Union competitors.

Mr. Tony Banks: That is all very interesting, but why does Britain rank only ninth among the 15 European Union countries in terms of per capita gross domestic product? If there is such a great success story for Britain, why are Italy and France ranked above us in the per capita GDP league?

Mr. Aitken: In fact, Britain is out-performing most European countries. We have the fastest growing economy in Europe right now. Last year, it grew two and half times faster than Germany's, one and a half times faster than the French, and eight times faster than the Japanese. Unemployment is falling by 1,000 a day. There is plenty of good news by any international comparison standard. Opposition Members should recognise that.

Spare Capacity

Sir Thomas Arnold: To ask the Chancellor of the Exchequer what is his latest estimate of spare capacity in the economy. [22215]

Sir George Young: There is no unique measure of spare capacity in the economy. But recent data and evidence from business surveys all point to strong growth in business investment this year.
The UK is experiencing a healthy well-balanced recovery, with falling unemployment and underlying inflation below 3 per cent. The Government's policies will ensure that economic growth is sustained with low inflation.

Sir Thomas Arnold: With three quarters of the economy outside manufacturing, will my right hon. Friend acknowledge that inflationary pressures remain subdued? Is it not ludicrous, therefore, to be talking about a boom-bust cycle and an interest rate increase to counter the threat of overheating?

Sir George Young: My hon. Friend is right. The Confederation of British Industry survey of capacity covered about a quarter of the economy. As for the other three quarters, to which my hon. Friend has referred, there are sectors in which there is clearly spare capacity, such as housing, construction and retail. We must examine the entire picture when we come to decisions.

Ms Primarolo: How does the Financial Secretary reconcile the Government's continued claim that the economy is in great shape with the Bank of England's view, as published today, that capacity constraints in manufacturing industry are prompting inflationary pressures? What do the Government intend to do about that conflict of interpretation?

Sir George Young: As the hon. Lady will have heard, the Governor has said that the economy is in better shape than it has been for many years. I do not agree, therefore, with the analysis that she has outlined. Investors would like to know where the Labour party stands on taxing, spending and borrowing. We have had no responses from Opposition Members for three quarters of an hour on key economic questions.

Retail Prices Index

Mr. Fabricant: To ask the Chancellor of the Exchequer what are his estimates for the retail prices index one month, six months and one year hence; and if he will make a statement. [22236]

Mr. Heathcoat-Amory: The November Financial Statement and Budget Report forecast that underlying inflation would be 2½ per cent. both in the fourth quarter of 1995 and in the second quarter of 1996.

Mr. Fabricant: Whatever the absolute rate of inflation, does my hon. Friend agree that the relative inflation rate—that is, our rate of inflation against those of competing nations—is of equal importance? Does my hon. Friend further agree that it is the relative rate of inflation which defines our competitiveness and our ability to create jobs? That being so, what was the relative rate of inflation under the Labour Government when the average rate was 15.9 per cent., and what in my hon. Friend's estimation would be our current rate of inflation if we had committed £13 billion more public expenditure this year, as the Labour party had promised in 1992?

Mr. Heathcoat-Amory: My hon. Friend is absolutely right. The underlying inflation rate of 2.6 per cent. for the

year to April is lower than the comparable average for the EC as a whole. Between 1974 and 1979, the Labour party's inflation record was not only disastrous at home but extremely poor by international standards. All the clause IV waffle that we hear is less eloquent than the fact that Labour cannot be trusted on inflation. The real lesson that the British people have learnt is never to give it another opportunity.

Oral Answers to Questions — PRIME MINISTER

Engagements

Mr. Gordon Prentice: To ask the Prime Minister if he will list his official engagements for Thursday 11 May. [22255]

The Prime Minister (Mr. John Major): This morning, I presided at a meeting of the Cabinet and had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall be having further meetings later today.

Mr. Prentice: Today, with the publication of the Nolan report, will the Prime Minister take full personal responsibility for the tide of sleaze that has engulfed his Government? Will he now admit that it is quite wrong for Ministers to move seamlessly from the Cabinet room to the boardroom, lining their pockets in the process?

The Prime Minister: I invite the hon. Gentleman to read the report before he comments on it. He will then see what Lord Nolan has to say about the great majority of men and women in British public life, their standards and their ethics, and he may just regret the way in which he and some of his hon. Friends have attempted, time after time, to issue general smears about specific matters.

Dame Jill Knight: To ask the Prime Minister if he will list his official engagements for Thursday 11 May. [22256]

The Prime Minister: I refer my hon. Friend to the answer I gave some moments ago.

Dame Jill Knight: Does my right hon. Friend agree that the size and scale of public rejoicing on Monday stoutly reaffirmed the love that the British people have for this country? They were waving Union Jacks, not tatty-looking red roses. Is it not appropriate to remind people that Labour's devolution policy would split this country more irrevocably and fundamentally than all Hitler's armies could possibly have done?

The Prime Minister: As my hon. Friend makes clear, last week's celebrations were a remarkable occasion. They struck a perfect balance between commemoration and celebration, and I think that they brought a great deal of pleasure to the many men and women whom we were honouring for their service during the war so many years ago. I believe that they also showed that the sentiments that unite us as a nation are far stronger than those sometimes presented as though to disunite us. That is very healthy for the nation as a whole: it is an enormous strength for this country—a strength that should not be put at risk by misguided policy.

Mr. Blair: People of all political persuasions enjoyed VE day, and I do not think that political capital should be made out of it. Now—is 2.5 per cent. still the Prime Minister's inflation target?

The Prime Minister: We set out our inflation target some time ago. It is between 1 and 4 per cent., and in the lower half of that range by the end of this Parliament. It remains the same.

Mr. Blair: Does the Prime Minister then disagree with the Bank of England, which says that he will not meet that target?

The Prime Minister: The Bank of England has made it perfectly clear that it supports the policy that we are carrying out. If the right hon. Gentleman had read the speech by the Governor this morning—I will quote it to him if he wishes, for clearly he has not—he would have seen that the Governor makes very clear the importance of maintaining a strong control of inflation, saying that in recent years we have been very successful in that.
I remind the right hon. Gentleman that the nearest that the last Labour Government got to low inflation was 8.4 per cent. on rigged figures over one quarter. We have had inflation below 3 per cent. for more than a year.

Mr. Blair: I do not think that the Government are in any position to talk of rigged figures—no, indeed. The Bank of England clearly does not agree that the Prime Minister will meet his target. How does a public rift between the Government and the Bank of England do anything other than damage the credibility of the economy? Does not the fact that rises in interest rates are even being contemplated at the moment, when for millions of people they have barely moved out of recession, show the fundamental weakness of the economy that the Government have never addressed?

The Prime Minister: I do not think that the Governor of the Bank of England thinks that it is a weak economy, as the right hon. Gentleman will see if he reads the Governor's speech. The reality is that, as usual, the right hon. Gentleman and his colleagues are playing both sides of the same policy. They criticise when interest rates go up and they criticise when interest rates do not go up. They simply do not know what they wish to do, except, whatever happens, to criticise it and to make short-term party political capital out of it; they do not give a fig for the long-term health of the British economy.

Mr. Churchill: Is it not clear that the French people—[Interruption.]

Madam Speaker: Order. The hon. Gentleman must be heard in the House.

Mr. Churchill: Is it not clear that the French people have no greater love of socialism than the British? Will my right hon. Friend neglect no opportunity to expose the fact that, behind the innocent cherubic face that the Labour party seeks to present to the world, is a party which, every time it has been in government, has wrecked the economy, destroyed business confidence and boosted taxes to very high levels on ordinary working people?

The Prime Minister: My hon. Friend is quite right about that. There is one matter in which Labour Governments have always been consistent:

unemployment has always gone up, interest rates have gone up, taxes have gone up and prospects have gone down.

Mr. Simpson: To ask the Prime Minister if he will list his official engagements for Thursday 11 May. [22257]

The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.

Mr. Simpson: Can the Prime Minister confirm that, under the regulations governing the national lottery, the fingers crossed symbol is the property of the Secretary of State for National Heritage? Does he appreciate that it has come to represent the symbol of his party in that it is all that remains of his strategy for winning local government elections, his guarantee of emergency care beds for the people of London and his own prospects of leading the Conservative party towards its next electoral catastrophe?

The Prime Minister: During the past four years we have taken decisions that are in the long-term economic and social interests of Britain. Many of them have been difficult and unpopular, but as a result we have inflation lower than we have seen for a long time, unemployment falling faster than anywhere else in Europe, investment showing that British industry is growing and exports which show that in eight or nine months out of the past 14 we broke new records. When did the Labour party ever preside over an economic circumstance remotely like that?

Mr. Thurnham: When my right hon. Friend next meets Mr. Chirac, will he congratulate him on his presidential victory and remind him how much better it is to be outside the social charter, especially now that unemployment in France is 50 per cent. higher than in this country?

The Prime Minister: I agree with my hon. Friend about the problems of the social chapter. There is no doubt that right across the rest of the European Union the social chapter costs jobs. Here it does not cost jobs, because we are not part of it. I can reaffirm to the House that neither in the short term nor in the long term will we become part of it.

Mr. Beith: To ask the Prime Minister if he will list his official engagements for Thursday 11 May. [22258]

The Prime Minister: I refer the right hon. Member to the answer I gave some moments ago.

Mr. Beith: Is the Prime Minister aware of the announcement within the last hour that the Asea Brown Boveri train building works at York is to close with the loss of 700 jobs? Does he recognise that that is a demonstration of the dreadful chaos of rail privatisation and that investment in the railway industry is grinding to a halt as a result? What chance is there that our rail system will have investment and that trains will he built in this country at all?

The Prime Minister: Of course I know of the job losses at ABB, and I very much regret them. But privatisation is no more responsible for those job losses than it is for an outbreak of measles. The right hon. Gentleman is simply wrong to blame privatisation. It was the Government's private finance initiative which gave ABB the opportunity to hid for contracts such as the


Northern line, the Heathrow express rail link and the Jubilee line extension. Unfortunately, ABB did not win any of those contracts, and that is the problem.

Sir Michael Neubert: As unemployment has come down by 632,000 since the last general election, is continuing to come down by an average of 1,000 per day and is below the European Union average, would it not be absolute folly to reverse that progress by adopting a national minimum wage? If such a policy is to be offered to the British people, do they not have an unchallengeable entitlement to know the level at which it will be set and how many hundreds of thousands of jobs will be lost as a result?

The Prime Minister: There seems to be some dispute among Opposition Members about whether they should proceed with the minimum wage and what its level would be. Certainly, despite their clarity that they wish to have a minimum wage, they are less clear about the level at which they would set it, and I find that rather odd. The right hon. Member for Sedgefield (Mr. Blair) is keen enough to tell us that he would enter a single currency in many years' time, which is a major decision, yet he cannot tell us, even perhaps two years ahead, were he to win the election, what he would do on a relatively minor decision such as the level of the minimum wage.
The reality is that the Opposition know that a minimum wage would cost jobs and they know that if we knew its level we would be able to calculate that loss. On any reasonable assumption, more than 750,000 people would lose their jobs as a result of Labour dogma.

Mr. Flynn: To ask the Prime Minister if he will list his official engagements for Thursday 11 May. [22260]

The Prime Minister: I refer the hon. Member to the answer I gave some moments ago.

Mr. Flynn: Is the Prime Minister not shocked by the news that the number of children who were hit and killed by road vehicles increased last year by a staggering 28 per cent.? Is he aware that that was mainly because the fronts of some vehicles are designed for appearance and not safety, with the addition of rigid bull bars which concentrate and multiply the force of accidents at the level of a child's head? Does he agree with his Ministers that those bars are useless, macho fashion accessories, and will he move swiftly today to avoid future tragedies by banning these deadly bully bars from all public roads?

The Prime Minister: I was not aware of the statistics that the hon. Gentleman mentions or the reason that he

ascribes to them. However, in view of what he says I shall certainly ask my right hon. Friend the Secretary of State for Transport to examine the matter and, having done so, provide me with his advice. If the hon. Gentleman's statistics are right, it is of course regrettable. I am glad to say that, overall, the position on road accidents is improving, and I hope that that will continue.

Mr. Hendry: Is my right hon. Friend aware of the positive reaction in my constituency and throughout the country to yesterday's White Paper, "Tackling Drugs Together", which contains the most comprehensive anti-drugs strategy of any Government? Does he agree that the key message to young people should be that all drugs are wrong? Does he also agree that any move by the House to legalise even soft drugs should be rejected because it would fundamentally undermine that message?

The Prime Minister: I strongly agree with my hon. Friend on the question of drugs, and I take the view that the legalisation even of soft drugs would be a very substantial mistake, not least because soft drugs are so often the route towards people seeking to experiment with harder drugs. It is very unwise for people to experiment with any drugs and we have no intention of legalising them. The proposals that we set out yesterday on tackling drugs have been very widely welcomed. Many experts have commented not only on the comprehensive nature of our proposals, but on the fact that no country in western Europe now has such a comprehensive plan in hand to deal with the desperate problem of drugs.

Mr. Mackinlay: To ask the Prime Minister if he will list his official engagements for Thursday 11 May. [22261]

The Prime Minister: I refer the hon. Member to the answer I gave some moments ago.

Mr. Mackinlay: Who is to blame for, and what is the cause of, all the negative equity that is blighting hundreds of thousands of households and families? What will be the consequences for the economy and for business if negative equity continues to grow, and what does the Prime Minister intend to do about it?

The Prime Minister: Fortunately, the amount of negative equity is now half the level it was at its peak and it continues to fall. Clearly, while there is negative equity, it is acting as a drag on the housing market. The more the economy grows, the more unemployment falls, and the more confidence begins to return, the sooner we shall begin to see the complete elimination of negative equity. When that occurs, it will be a very welcome development.

Post Office

Madam Speaker: We now come to a statement by the President of the Board of Trade. [Interruption.] Will hon. Members who are leaving please do so quickly?

The President of the Board of Trade and Secretary of State for Trade and Industry (Mr. Michael Heseltine): Madam Speaker, I wish to make a statement on the Post Office and to set out a number of changes that I intend to introduce to the present arrangements.
In the case of Post Office Counters, we agreed last year that it should offer the services of the network of 20,000 post offices—19,000 of which are run as private businesses—to a wider range of clients. That policy has led to a number of new services being offered or trialled at post offices, such as bureaux de change services, travel insurance and the free payment of gas bills. Post offices are also the largest retailer of national lottery tickets. I welcome those developments, which should help strengthen the network of post offices, not least those in rural areas.
I intend a number of changes to the financial regime of the Post Office, notably the external financing limit, or EFL. Although no responsible Government could undertake to ring-fence the Post Office entirely from the pressures on public spending, I am prepared to agree that in future we shall aim to set the EFL at about half the Post Office's forecast post-tax profit. I hope to make progress in that direction this autumn.
I intend to adopt a more strategic corporate plan process and to remove the formal limit on the Post Office's capital expenditure, together with the associated detailed scrutiny of investment projects in its core business. Those measures should enable the Post Office to plough back the benefits of additional efficiency into improving services for customers.
I now turn to the board's wish that the Royal Mail should be able to extend its activities into adjacent markets. Although I am prepared to consider such requests, I have told the Post Office that in doing so, I would expect a considerable increase in the use of the private financing initiative, in respect of both activities in associated fields and increased opportunities for the private sector to participate in its existing activities.
There are certain provisos on my willingness to make those changes. First, there must be real pressure on the efficiency of the Post Office. I am about to appoint consultants to carry out a performance review of the Post Office's operations.
Secondly, the Post Office must generate the funds for any expansion from increased efficiency and not from increased prices. I therefore greatly welcome today's announcement by the Royal Mail that it intends to maintain its current domestic tariffs until at least March 1996. That means that there will have been only one domestic tariff increase in the first four years of this Parliament, a considerable achievement.
Finally, I have told the board that I would expect all new developments to be separately accounted and, where practical, to be developed through separately established Companies Act subsidiaries. As a first step towards that, I have agreed with the board that it will convert the main operating units of the Post Office into Companies Act companies.
Before concluding, I would like to thank the Trade and Industry Select Committee for its very helpful reports on these issues. My Department is replying in detail to its most recent report today.
The measures that I have announced today represent a pragmatic and balanced package for the Post Office and its customers. I commend them to the House.

Dr. John Cunningham: I have the pleasure of giving a general welcome to the statement, especially as it is a modest step. These are modest measures in the direction of policies for the Post Office for which we in the Opposition have argued for several years. The whole House should congratulate the management and all employees of the Post Office on the announcement today that it will hold steady prices for the Royal Mail. That is a significant achievement—an achievement in public ownership and in the public sector—by everyone engaged in the Post Office.
The President of the Board of Trade has just announced that, yet again, he is to appoint consultants to examine the Post Office. Is he aware that we know that he has already spent £2 million on engaging consultants to examine the Post Office? Even after that expenditure, funded by the taxpayer, he has come forward with only a very modest response to our requests, the requests of the management of the Post Office and the requests of the Select Committee on Trade and Industry for change.
What is new about the right hon. Gentleman's announcement that, in future, he will aim to set the external financing limit at about half the Post Office's forecast taxed profit? That is the status quo; it is not a change. It is recognition of the circumstances that exist in the Post Office and of its arrangements with the Government today. That is no change—no step forward.
Why has the right hon. Gentleman apparently abandoned his previous commitment, although he said that it was his lifetime ambition to set the rest of his political career in the track of privatising the Post Office? Is the reason that he knows that there is no majority in the House for the privatisation of the Post Office? Does he recognise that he is, again, admitting defeat on his principal personal objective?
Is the right hon. Gentleman aware that, a year ago, he told the House, the Select Committee on Trade and Industry and everyone in the Post Office that he was not in favour of the private financing initiative for Post Office operations? Why has it taken him a year to change his mind? Why, during that time, did the Government insist that the Post Office, which wanted to lease trains for the mail, should spend £50 million in cash to buy those trains when, using the initiative announced today, it could have saved that expenditure for other capital investment?
Is not the reality that the Government could now, without legislation, remove altogether the current capital expenditure limits on the Post Office, relax even further the scrutiny of specific projects, free altogether the Post Office management from the DTI's nit-picking interference, give new freedoms to Post Office Counters Ltd., end the closure of Crown post offices, and get off their backside and get on with the private financing initiative about which the right hon. Gentleman has prevaricated for so long?
Is not it also clear that the only way in which the public, who overwhelmingly oppose privatisation of the Post Office, can ensure the defeat of that privatisation is to ensure the defeat of this Government?

Mr. Heseltine: The right hon. Gentleman may not have read the Green Paper that we published a year ago as carefully as I would have hoped, because, far from rejecting the option of the PFI, I said on page 15, paragraph 9:
The relaxations discussed in paragraph 6, together with use of joint ventures under the PH, would be of some value to Royal Mail.
That is not what one would call rejecting the option, then or now. It is quite clear that we looked at that option. It was not the best option, but it was an option and it was the one that, in the light of the circumstances, we have decided to pursue.
I cannot accept for one moment that there is an argument for halting the closure or conversion of Crown post offices into sub-post offices. The fact is that the record of achieving that has been considerable. The benefits and efficiency that have been achieved have followed as a consequence. It is a matter for a management decision of the Post Office. It is continuing to do that, because it believes that it is in the interests of its customers.
The right hon. Gentleman is also wrong about the issue of the EFL. The fact is that it is true today that it is closer to 50 per cent., but it has been moving in that direction from higher percentages. It is because we want to try to discuss arrangements with the management of the Post Office for a more stable relationship in the future that we have attempted to quantify, within the constraints that I have set out, what that EFL might look for in the future.
I was again amazed that the right hon. Gentleman should be surprised that in taking this step to help the Post Office, I should be appointing consultants to look at the books within the Post Office.

Dr. John Cunningham: Again.

Mr. Heseltine: It is not a question of again. Does not the right hon. Gentleman realise that business is a dynamic process? If I am going to have to look at a whole range of judgments on the efficiency of the Post Office, it is no use relying on evidence that was given to me a year or two years ago. I have to see facts as they are and as they will be in the future.
That is a classic example of why the right hon. Gentleman and his party have never understood the weaknesses and frailties of nationalisation. They rely on the advice of the managers, as interpreted by their officials. I want to make sure that I have got someone inside the Post Office who can see the books and advise me about what is actually happening.
The right hon. Gentleman accuses the Government of attempting to adopt the policies of the Labour party. That, if I may say so, is rich. The party that says that it has abandoned nationalisation, is trying to dissociate itself from the trade unions and trying to repeal clause IV now somehow suggests that we are pursuing its policies. Exactly the opposite is the case.
When the right hon. Gentleman says that I have abandoned a lifetime's ambition to privatise the Post Office, let me say that I recognise that I failed to persuade some 10 of my Conservative colleagues to move to a

privatisation process. I got a lot closer to persuading 100 per cent. of my party to back privatisation than the right hon. Member for Sedgefield (Mr. Blair) got in persuading his party to abandon clause IV.
What the right hon. Gentleman's opposition to our proposals revealed clearly is that he still hankers after a public sector solution. It is all very well to talk about getting rid of clause IV, but when the chips are down, that is where the Labour party's hearts and minds belong.

Mr. Patrick McLoughlin: May I welcome my right hon. Friend's statement on his general relaxation of some of the rules relating to the Post Office? Could he say a little more about the future of sub-post offices? Already, some 19,000 post offices are in private ownership. There is a great feeling that they ought to be given far more commercial freedom to take on far more activities. The only way that rural post offices will survive is by giving them greater business opportunities. Will my right hon. Friend say a little more on that matter?

Mr. Heseltine: I am delighted to respond as positively as I can to my hon. Friend. Let me tell the House what I have said to the officials in my Department. I asked them whether we have turned down any requests for further freedoms. I am not aware of any requests from Post Office Counters that we have turned down. If any right hon. or hon. Member has some ideas that we should pursue to free up the rural and urban post offices, I shall be immensely sympathetic. To the best of my knowledge, they have the freedom to move in an increasingly wide area and I do not know of any additional freedoms for which we have been asked.

Mr. Nick Harvey: I welcome the right hon. Gentleman's statement and his conversion to the policy that he has outlined, albeit a little belated and perhaps rather grudging. Will he go one step further and remove the uncertainty that might arise from his decision to change the operating companies into Companies Act companies? Will he confirm that it is not his intention to come back later to try to privatise any of those companies? Will he tell the House why he intends to continue to levy an EFL of 50 per cent. of post-tax profit, which is clearly a higher financial burden on the Post Office than on any of its rivals or on any other private sector companies?
The right hon. Gentleman said that he intends to appoint consultants. In a previous answer, he sounded as if he intended to keep them on virtually a permanent basis. Does not the Post Office's achievement, which he rightly applauded, of managing to keep mail prices down, provide some evidence of good performance? Is it really necessary to use consultants on a permanent basis and at further expense?
The post office network has been referred to. Will the right hon. Gentleman tell the House whether the Government will invest in smart card technology in the rural post office network?

Mr. Heseltine: The hon. Gentleman will know that the automation of sub-post offices is now the subject of advanced negotiation. My right hon. Friend the Secretary of State for Social Security has negotiated an eight-year contract for the benefit arrangements. There will be a much more sophisticated facility available through a PFI arrangement to the sub-post offices, and I welcome that as one of the developments of their potential.
On the appointment of consultants, if I am to be expected to make judgments about how the business can expand, it is important that I have full access to the facts and figures. The hon. Gentleman made the assumption that keeping prices down has followed as a result of continued efficiencies. That is perfectly true. The question that has to be asked is how such large efficiencies were achieved after years in which the business had been a public corporation. That is a hard question, and there is only one answer: it had not been efficiently run in previous years. I am determined to do all that I reasonably can to change the climate. The 50 per cent. EFL is a matter of judgment and negotiation. I must have regard to the interests of the public Exchequer in securing a reasonable return by way of the dividend that the EFL represents.

Several hon. Members: rose—

Madam Speaker: Order. It appears that every time there is a ministerial statement I have to remind hon. Members to be brisk with their questions and to put only one question to the Secretary of State. As hon. Members know, at statement time I try to call every hon. Member who wants to intervene. That is unprecedented; my predecessors have not done so. I cannot go on doing that if hon. Members make statements and ask several questions. I shall have to look at statement time again if hon. Members do not co-operate with the Chair. One question each, please.

Mr. Jim Lester: As one of the 10—although I think that there were rather more than that—who opposed the privatisation of the Post Office, I congratulate my right hon. Friend on a pragmatic and coherent policy statement that will carry with it many people, particularly the general public who were worried about potential changes. It gives the Post Office and Post Office Counters a way forward that we can all support.

Mr. Heseltine: I am most grateful to my hon. Friend. I know that he was one of the small number of my colleagues who disagreed with my views. I do not believe that this is the ultimate and correct solution. It is the politically possible solution, and that is a step on from where we were. When I see what is happening across the world and the potential for the Royal Mail if we had turned it into a first-class international trading company, I must say that I do not bring this proposal to the House believing that we have ended the job.

Mr. Richard Caborn: I thank the President of the Board of Trade for his response to the Select Committee. I hope that we can get that into the public domain as quickly as possible, because there is a great deal of information there in which hon. Members will be interested. May I also thank him for at least agreeing that the status quo is unacceptable and that there should be some move towards commercialisation, even within the public sector borrowing requirement? How are the Royal Mail and Parcel Force to use the PFI if the private sector is not to be a major stakeholder?

Mr. Heseltine: The whole point of the PFI is to bring the private sector into partnership with the public sector. My announcement today merely indicates the ways in which we can move in that direction.

Sir Dudley Smith: While many of us have complained from time to time that a letter has been unexpectedly delayed by the postal services, is it not a fact that postal services in other advanced countries are a joke compared with our service, which is extremely efficient? Is my right hon. Friend aware that the postal service in this country has improved enormously in the past few years? Is he not wise and sensible to put the utmost pressure on it to keep that up?

Mr. Heseltine: I agree that the Royal Mail provides a very high quality of service. The standards have improved, and the returns that the Exchequer is achieving have improved. I take the view—this is where I disagree with some hon. Members—that I should build on a success where I see it and give it a wider opportunity. The Labour party, by and large, takes the view that it should be constrained and limited to ensure—[HON. MEMBERS: "We do not."] It is no use Labour Members saying that they do not. We all know what they did. Capital investment in the last five years of the previous Labour Government, in today's money terms, was less than half what it has been in the past five years of this Government.
In the last five years of the previous Labour Government, the Post Office lost £300 million. In the past five years, under this Conservative Government, it has made more than £1 billion. That is the real world. There is no point in Labour Members lecturing us about what they would or would not do. We know what they do when they get power and that is the best possible argument for keeping them where they are, without any power.

Ms Kate Hoey: The President will be aware that the public will—generally—be very supportive of the small measures that he has announced today. The public, and hon. Members, will, however, want to know why it has taken three years—it could have been agreed three years ago—and £2 million of consultants' fees to reach a general agreement. Why has it taken that long?

Mr. Heseltine: Because I was investigating ways in which to make what I thought was the right step. To do that was a time-consuming business. It certainly took a proper period of time, and I make no apologies for that. What matters is not whether it took time to make the decision, but whether it adversely affected the Post Office in the meantime. One need only look at the results—the rising profitability—to realise that it has not affected the opportunities of the Post Office.
In real terms, we are talking not about nit-picking details, but about where the future of this great company will be among the increasingly sophisticated multi-media operations and world-class competitors of tomorrow. What the House will not face and has not faced is why American multinational companies should be free to come and trade in this country and take the business from our Royal Mail while we deny our Royal Mail the opportunity to fight on its own terms.

Dr. Keith Hampson: Does my right hon. Friend accept that that is precisely the point? If Opposition Members had found that it was possible to commercialise the Post Office, they would have done it. Unless the shadow Chancellor allowed another Labour Government to pay absolutely no regard to the disciplines of public sector companies, we can now go only one way and free those companies as far as possible. The statement, welcome as it is, is inadequate in one essential


area. The companies should be totally free to raise the investment that they need when and how they need it in the private capital markets of the world. We should be privatising the Royal Mail. My right hon. Friend has not gone far enough.

Mr. Heseltine: I cannot in any way improve on what my hon. Friend has said. That is exactly my view. But from where we were, I have taken a step in the right direction.

Mr. Peter Hain: In welcoming the President's statement, may I ask him about its European implications? In considering adjacent markets, would he allow the Royal Mail and Parcel Force to engage in joint ventures with—possibly—private sector operators in Europe so that the British Post Office may conquer the European mail market, which is critical for the future? Will he also categorically resist any attempt which, as I understand, will be forthcoming from the European Commission, to impose VAT on postal services in view of Swedish entry? That seems to be absolutely vital for the future. Will he guarantee a minimum level of the national network for Post Office Counters?

Mr. Heseltine: The hon. Gentleman will appreciate that we are doing everything possible, and far more than any other Government have ever done, to enhance the potential for Post Office Counters and sub-post offices. I am extremely grateful to the National Federation of Sub-Postmasters, which has widely praised what the Government are doing. There is absolutely no doubt about support for our policy.
Were we to inject a statutory minimum number of post offices, that would involve a degree of prescription that is economically unrealistic. Why should we stop at rural post offices? One could think of an endless stream of desirable features of an economic society that one could underpin with a state guarantee. 'That is an unrealistic suggestion, and it merely reveals the difference in approach between Opposition Members and those on the Conservative Benches.
As to how we deal with the European opportunities, it flows from my statement that I shall discuss them with the Royal Mail and the Post Office. The position there is changing a great deal. As the House knows, the Germans and the Dutch are moving to a private sector solution for their mail. I am prepared to look at a PH solution, but I shall take into account the two-way nature of such activity. There are significant operations within the Post Office that open themselves up to partnerships with the private sector. If I am expected to move in one direction by extending the opportunities, I shall expect the Royal Mail and the Post Office to do exactly the same with their activities.

Mr. Hain: What about VAT?

Mr. Heseltine: I have no reason to believe that there is any threat to the present status.

Sir Peter Emery: I thank my right hon. Friend for reinforcing support for sub-postmasters and sub-postmistresses throughout the country. He has asked for suggestions to assist them. May I therefore suggest that, if all sub-postmasters and sub-postmistresses were able to issue motor vehicle licences, which they have

wanted to do for a long time, that would be greatly welcomed by people living in country districts? That would be a great step forward.

Mr. Heseltine: That is a constructive suggestion from my right hon. Friend. I keep asking for advice as to whether there are any outstanding requests. I am not aware of any, but I shall certainly consider that made by my right hon. Friend and write to him.

Mr. Dennis Skinner: Is the Minister aware that he is in a very odd constitutional position? Three times already this afternoon he has bemoaned the fact that he cannot get through the policy he really wanted—that is, to privatise the Post Office. He has then come along and attacked people because they have put forward alternatives, saying, "Well, it is not really my policy. It is second best." Why does he not do the decent constitutional thing, as he did over Westland, and resign and launch his counter-attack from the Back Benches?

Mr. Heseltine: Of all the hon. Members to ask that question. Am I now to understand that, within the Labour party, the hon. Gentleman is against trade unions and against nationalisation, and is now abandoning his support for the Campaign for Nuclear Disarmament? If he is not, why has he not resigned from the Labour party?

Mr. Edward Leigh: Given the parliamentary arithmetic, most people would accept that my right hon. Friend's statement represents a sensible, pragmatic way forward. Can he explain whether there is any logic in the state owning a commercial organisation to which he has given full commercial freedom? There is no logic and no point in that.

Mr. Heseltine: There is no logic. My hon. Friend is entitled to great praise for the remarkable work that he did when he was with me at the Department of Trade and Industry to explore the very ideas under discussion. As he will know, logic is not always the controlling influence in politics.

Mr. Tam Dalyell: The right hon. Gentleman's blast to Bolsover will not quite do. Is the President aware that, in his candid, truthful, revealing and much-to-the-point answer to his hon. Friend the Member for Broxtowe (Mr. Lester), he said, "Look, I don't believe in this policy."? Is it old-fashioned to think that when he and I came to the House all those years ago, a Secretary of State in such a position would have asked the Prime Minister at least for transfer to other work? Is it not a serious matter when a Secretary of State quite obviously does not believe in the policies that he is putting forward?

Mr. Heseltine: If my blast at the hon. Member for Bolsover (Mr. Skinner) will not do, I am happy to have a blast at the hon. Member for Linlithgow (Mr. Dalyell).
I have made the position absolutely clear. The policy that I am putting forward today is better than the policy that is in place at the moment. It is not as good as the policy that I tried to persuade the House to adopt a year or so ago, but it will enhance the position of the Royal Mail in an acceptable way.
There is a better way, a better tomorrow, but if I am to be told that one must stay where one is unless one can reach the ultimate objective, I have to tell you, Madam Speaker, that none of us would ever move anywhere in politics if we did that.

Mr. Barry Porter: I am grateful for my right hon. Friend's remarks in relation to the Trade and Industry Select Committee, but I would not want him to think that some of us who are members of that Committee believe that what we proposed was the ultimate objective. I think that he has made that clear. Nevertheless I would like him to reiterate that we are making the best of a job—[HON. MEMBERS: "Bad job."]—and it is a pragmatic solution as we stand, but I hope that that is not the end of it and that there may well be bluebirds over some cliffs of somewhere or other.

Madam Speaker: Order. I was waiting for a question in all that. In fact it was a comment, and there was not a question. This is the time for questions on the statement. Perhaps the Secretary of State will make a stab at responding to that non-question.

Mr. Heseltine: I was about to burst into,
We'll meet again—don't know where, don't know when",
but I welcome another trimmer in the art of politics, my hon. Friend.

Mr. Peter L. Pike: Does the President of the Board of Trade agree that some of the commercial activities to which post offices cannot return are the services that were provided by Girobank, which the Post Office lost when it sold Girobank to the Alliance and Leicester building society against its will, and to which post offices are banned by the conditions of sale from returning?

Mr. Heseltine: That is an important issue. I know that discussions are going on—I am not sure what stage they have reached—with clearing banks about what facilities might be made available through the post office network. I do not have a specific statement to make on that subject, but there are interesting potentials out there.

Mrs. Ann Winterton: May I congratulate my right hon. Friend on realising that politics is the art of the possible, and may I welcome the statement that he made today—not least on the new arrangements for the Royal Mail? Does he agree that those arrangements will further enhance the service that is given to the customer? He has already announced that the price is to remain as it is, and all my constituents will welcome that.

Mr. Heseltine: My hon. Friend is right. They will enhance, but they will not maximise. That is the difference between us.

Mr. Brian Wilson: It is great to be discussing a public sector success story, but it is odd that, although the statement has been generally welcomed by Opposition Members, the President of the Board of Trade does not agree with the statement that he is making.
Will the President of the Board of Trade at least accept our gratitude for enunciating the new doctrine of permanent consultancy, whereby consultants report and he and his Department take a year to consider the report, by which time it is time for consultants to report again? It is a very lucrative doctrine for the consultancy industry.
Will the right hon. Gentleman confirm that article 100(a) of the treaty of Rome will remain the only legal basis for any policies adopted regarding Post Office liberalisation in future? It is a very important matter at present. Does he also recognise that the policy of closing down Crown post offices is despised in hundreds of communities throughout the country? If he does not recognise that after the local elections, he certainly missed something. Anyone who has visited places where the local post office has been shoved into the back of a supermarket knows that everyone resents what has been done and wants to retain a Crown post office in the town centre.
Finally, does the right hon. Gentleman accept that what we are discussing today, above all, is a defeat of his ambition to privatise the Post Office? The only way to ensure that that defeat is maintained is to defeat the Tories.

Mr. Heseltine: I am not aware of any changes in the relationships that we have with the European Union with regard to the Post Office. If that position changed, I would of course inform the House.
I am very interested in what the hon. Gentleman has to say about the continued unease of constituents in places where Crown post offices have been converted to public post offices. Such a conversion has taken place where I live. I cannot remember when I last heard anyone talk about it.
The service is perfectly satisfactory. There are 19,000 sub-post offices. I do not receive letters of complaint. Our proposals have been warmly welcomed by the National Federation of Sub-Postmasters. As usual, the only people who are completely out of touch are Labour Members who have listened to what the unions have said about the matter. They are so ignorant about the situation that they do not know that 19,000 out of 20,000 post offices are already privately owned.

Business of the House

Mrs. Ann Taylor: May I ask the Leader of the House for details of future business?

The Lord President of the Council and Leader of the House of Commons (Mr. Tony Newton): The business for next week will be as follows:
MONDAY 15 MAY—Progress on remaining stages of the Gas Bill.
Motions on the conditional fee agreements order and the conditional fee agreements regulations.
TUESDAY 16 MAY—Conclusion of remaining stages of the Gas Bill.
WEDNESDAY 17 MAY—After the usual Wednesday morning Adjournment debates, Opposition Day (12th allotted day). Until about 7 o'clock there will be a debate entitled "The Further Erosion of Rail Services due to Privatisation" followed by a debate entitled "The Costs to the Country of Privatising the Nuclear Power Industry". Both debates will arise on Opposition motions.
THURSDAY 18 MAY—Debate on the report of the Committee on Standards in Public Life (the Nolan Committee) on a motion for the Adjournment of the House.
FRIDAY 19 MAY—The House will not be sitting.
The House will also wish to know that European Standing Committee B will meet on Wednesday 17 May at 10.30 am to consider European Community document No. 4523/95, Relating to Energy Policy.
MONDAY 22 MAY—Progress on remaining stages of the Child Support Bill, to be brought to a conclusion on either Tuesday or Wednesday.
[Wednesday 17 May:
European Standing Committee B—Relevant European Community documents: 4523/95 Energy Policy; Relevant European Legislation Committee Reports HC 70-ix (1994–95) and HC 70-xiv (1994–95).]
It may also be necessary to take some Government business on Thursday 25 May. The House may wish to be reminded that, subject to the progress of business, it is proposed that the House should rise for the spring Adjournment on Thursday 25 May until Tuesday 6 June.

Mrs. Taylor: I thank the Leader of the House for that statement, and I ask him to confirm that the Wednesday morning debate the week after next will take the form of a spring Adjournment debate.
As to next week's business, the House will be pleased that we are to have an early debate on the report of the Nolan committee. As the committee was set up by the Prime Minister, will the Prime Minister open that important debate? Will the Leader of the House confirm today that the Government will accept the main recommendations of the Nolan committee as a good starting point for rebuilding public confidence in our democratic system? Will the Leader of the House ensure that, following next week's debate, there will be an early opportunity to make the necessary changes so that we can implement the recommendations in the Nolan report within the time scale that the committee advised?
The House will have noted that next week the Opposition is again providing an opportunity to debate

some of the issues that greatly concern the public. Given the widespread and deep public unease about privatisation by the back door without any further reference to Parliament, what steps will the Government take to gain the approval of the House before there are any more sell-offs of public assets?
What time will the Government allocate to discussing the disaster that is unfolding at York, where the hiatus in railway investment is causing serious problems? Those problems should not be dismissed, as the Prime Minister dismissed them today, as simply the equivalent of an outbreak of measles. There will be dramatic job losses in York and another indigenous British industry will go to the wall as a direct result of privatisation. The Government should allow time to debate such an important issue.
Turning to another subject, does the Leader of the House recall that, when he was Minister for the Disabled, he praised the Labour Opposition for devoting half a Supply day to debating the 15th anniversary of the Chronically Sick and Disabled Persons Act 1970? Will the right hon. Gentleman, in his present capacity, find time for a debate on the 25th anniversary of that legislation at the end of May, which is of great concern to many people throughout the country?
Finally, as the Government's economic policy has reached a new low in credibility, will the right hon. Gentleman say when the Government expect to make their summer economic statement and when the House will have a chance to debate it?

Mr. Newton: I should have said that I expect the debate on Wednesday week to be of the kind that the hon. Lady has in mind, when I sit here for three hours and attempt to answer problems from all quarters.
I anticipate that the debate on Lord Nolan's report will be opened by my right hon. Friend the Chancellor of the Duchy of Lancaster, who was responsible for much of the evidence that the Government submitted to the Nolan committee. That would seem appropriate. I was not absolutely clear whether the hon. Lady was referring to the proposals that are for the Government or those directed more at the House.
As to the recommendations concerning Ministers leaving office and appointments to what are known as quangos, the Government welcome and accept their broad thrust, but obviously they need careful and detailed examination. As to recommendations directed at the House, the report itself recognises that our rules and procedures are for the House to decide. However, the Government hope for wide agreement on a positive response to the report, which is in line with the hon. Lady's remarks.
On privatisation, my right hon. Friend the President of the Board of Trade said in his statement earlier this week that there will be a debate, and obviously we will look at that again in the light of the Opposition debate scheduled for next Wednesday. There is not much that I can add to the remarks of my right hon. Friend in Prime Minister's questions today about the ABB closure at York. He made it clear that the problem is due to a number of factors including the completion of major contracts for Central line trains and some others and the firm's failure to win


contracts for the Jubilee line, Heathrow Express and Northern line. The hon. Lady might at least have acknowledged that.
The hon. Lady referred to something that I said about the Chronically Sick and Disabled Persons Act 1972 when I was Minister for the Disabled. Substantial time has been provided this year for the Government Bill designed to build new rights for disabled people. That may be the most appropriate form in which the House will return to debate those matters in due course. At the specific request of the right hon. Member for Manchester, Wythenshawe (Mr. Morris), I have agreed to open the exhibition starting on Monday to mark the 25th anniversary of the 1972 Act, which I shall do with pleasure.
As to the hon. Lady's over-aggressive final question, I will consider the timing of the summer economic debate, but I would do that with more enthusiasm had the hon. Lady not made absurd remarks about the credibility of Government economic policy against a background of the Labour party having no economic policy whatever.

Dame Peggy Fenner: Is my right hon. Friend aware of the way in which the Nolan report was made available to right hon. and hon. Members today? Will he direct this question to whoever is responsible for passing information to right hon. and hon. Members? Instead of the report being handed out as usual by the Vote Office in a perfectly competent and efficient way, the small Corridor next to the Members Board is full of individual envelopes. Am I supposed to look through them all to find F for Fenner? Busy Members of Parliament do not have time to do that. I ask my right hon. Friend to make sure that such communications are delivered in a more efficient manner.

Mr. Newton: I hope that those words have fallen on the ears of those who will immediately check that there are copies in the Vote Office. I understand that Lord Nolan thought that it was a proper courtesy on his behalf to arrange for copies to be sent to all hon. Members.

Mr. Paul Tyler: Can the Leader of the House ensure that, when the Secretary of State for Transport takes part in the debate next Wednesday, whatever the precise terms of the motion, he takes the opportunity to range over all the damage that is being inflicted on the rail industry and the rail network by the continuing failure to invest when the threat of privatisation is hanging over the industry? I am not thinking only of ABB at York, to which my right hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith) referred during Prime Minister's Question Time: I am also concerned—as I hope are the Leader of the House and the Secretary of State—about the continuing failure to bring forward the programme for maintenance and safety on the rail network.
As the Leader of the House may be aware, there are fears within British Rail and Railtrack that the hiatus caused by the problem is creating real difficulties in terms of speed restrictions, weight restrictions and threats to safety. Will he give an explicit assurance that the Secretary of State for Transport will address that question during the debate?

Mr. Newton: I can give the hon. Gentleman an explicit assurance that my right hon. Friend the Secretary of State

for Transport will cover all matters that he considers relevant to the debate and, no doubt, touch on points of interest to the hon. Gentleman. He may also make a number of points that the hon. Gentleman has not made, including reference to the fact that British Rail has invested £4,000 million in new rolling stock since 1979.

Sir Peter Emery: Will my right hon. Friend remind the House that the Jopling reforms were introduced on a Sessional Order, and that, unless they are renewed or become Standing Orders, they fall at the end of the Parliament? At his request, the Procedure Committee is attempting to monitor their working and in order to obtain the opinion of all Members of Parliament, a short questionnaire will be circulated to all right hon. and hon. Members so that both sides completely understand whether Members of Parliament consider the reforms to be a success or a failure. It will be helpful if all right hon. and hon. Members respond to the questionnaire.

Mr. Newton: My right hon. Friend is certainly right to remind the House that they are Sessional Orders, although he marginally slipped in saying that they will fall at the end of the Parliament. They will fall at the end of the Session. I am happy to be used as a verbal notice board for the advertisement of the questionnaire of the Procedure Committee.

Ms Angela Eagle: With respect to the debate on the Nolan report, which I welcome, the Leader of the House told us that it will be on a motion for the Adjournment of the House. As a member of the Select Committee on Members' Interests, I carefully examined the recommendations that relate specifically to the House, rather than the Executive and other Government appointments. I notice that Lord Nolan has made three types of recommendation: those that he wants implemented immediately or as soon as possible; those that he wants implemented by the end of the year or the start of the new Session; and those on which he wants progress by the following year.
As the report would abolish the Committee on which I serve, and that Committee is in a difficult position at the moment, it would be extremely helpful if the Leader of the House could let us know when we can make progress on the changes that Lord Nolan recommends to how the Register of Members' Interests is formed and policed, as they have a direct impact on some of the complaints with which we are wrestling. It would be enormously helpful if the Leader of the House could give us an early indication of when progress will be made on those recommendations.

Mr. Newton: The hon. Lady has given quite a good illustration of why I feel that a wide-ranging debate on the Adjournment is the first step. They are complex and varied recommendations. Many of them require much detailed work to translate from the recommendations of the committee into resolutions that the House could pass. The right first step is not for me to prejudge what the House will wish to say next week or any other discussions that might be necessary to provide an opportunity, as I am doing, for the hon. Lady to make any points she might wish to raise.

Mr. Richard Tracey: Now that the House has had 24 hours to digest the excellent White Paper "Tackling Drugs Together", will my right hon. Friend


give urgent consideration to a debate on it in Government time? There seems to be a fairly short period before the deadline, especially for local arrangements to be made, and it would be useful for local authorities to have some guidance from the House and for hon. Members to be able to discuss it. That would also provide the Liberal party with an opportunity to explain how it will come to terms with the rather strange decisions taken by its last conference—to legalise cannabis, for instance.

Mr. Newton: As my hon. Friend will have heard yesterday, the Liberal Democrats who spoke then were also led into some rather curious contortions. As I said then, I do not particularly want to engage in their internecine warfare: I shall leave it to them to get on with it.
As for my hon. Friend's suggestion, nothing would please me more than to be able to arrange time for a debate on this well received and important report. I shall use my usual best endeavours to do that.

Mr. Jim Marshall: May I draw the attention of the Leader of the House to early-day motion 1030?
[That this House, concerned at the anger felt amongst the British Sikh community about the impact on the employment prospects of Sikhs of the Personal Protective Equipment at Work Regulations 1992, introduced as a consequence of a European Directive, notes that British Sikhs have for many years been exempt from wearing hard hats in many areas, including service in the British Army and on construction sites; and urges Her Majesty's Government to introduce amending legislation urgently so that British Sikhs may continue to work in all non-construction employment whilst wearing turbans.]
That highlights the continuing concern among the Sikh community at legislation, introduced as a consequence of a European directive, which compels them to wear protective headgear in non-construction employment. Does the right hon. Gentleman recognise this continuing concern? The Sikhs believe that it will lead to a loss of jobs for them. Will he raise this matter urgently with the Secretary of State for Employment, and if possible arrange for a debate on the topic in Government time?

Mr. Newton: I shall certainly bring that question to my right hon. Friend's attention, but the United Kingdom was obliged to implement the directive, and granting a universal exemption could have run the risk of challenge.

Mr. Henry Bellingham: Further to today's statement on the Post Office, can the Leader of the House confirm that we shall have a debate on that paper in the near future, and that it never was the Government's intention to privatise Post Office Counters? Deliberately misleading propaganda on that front frightened many small postmasters in rural constituencies—they are the lifeblood of villages. Does my right hon. Friend agree that these same sub-post offices should be given the chance to have vehicle licensing facilities if they want them?

Mr. Newton: I will of course consider the question of a debate, as it would be right for me to do. As for my hon. Friend's second two questions, I do not think that I can give off-the-cuff undertakings about particular aspects of future Post Office business; but I can certainly confirm what he said—that there was a widespread and perhaps

deliberately engineered misunderstanding about Post Office Counters. We should bear it in mind too that the overwhelming majority of their work has always been privatised because it is conducted in sub-post offices.

Mr. David Winnick: Now that we have had Nolan, would it be possible shortly to arrange for a statement on setting up a committee to give guidance to Members of Parliament—particularly Tories—on voting? Has the right hon. Gentleman seen tonight's Evening Standard, which carries photographs of 44 Tory Members who betrayed their constituents last night by their disgraceful voting behaviour? As we do not yet have such a committee, is it not useful that the newspapers at least can highlight the way Tory Members are willing to give far greater loyalty to the Whips than to their constituents?

Mr. Newton: It is pretty silly to suggest that Members of Parliament whose judgment is at least as good as that of the hon. Gentleman, looking at the interests of their constituents in the round and at the need to reshape London health services, not least to improve primary care, should not have come to the conclusion that they should vote for the Government's proposals.

Mr. Jacques Arnold: I notice that the Opposition have called for debates next week, first against the privatisation of the rail services, and then against the privatisation of the nuclear industry. We have heard earlier today how they are against the privatisation of the Royal Mail. Does my right hon. Friend wonder why there has been such an enormous commotion over the abolition of clause IV when the Opposition continue to oppose privatisation serially, in case after case, as they always have done?

Mr. Newton: I shall indeed ponder that question, but without much expectation of either being able to provide an answer or getting one from anyone else. I am interested also in how the Labour party will explain what it would describe as the disadvantages of moving from a position in which nationalised industries used to cost £50 million a week to one in which privatised industries generate £50 million a week in tax revenue.

Mr. Tam Dalyell: May I preface my question by saying that the Table Office, as always, has behaved impeccably and has simply been doing its job. However, as six questions to the Crown Office on Lockerbie and one to the Prime Minister have been refused because of the artful way in which Ministers block questions, and as the Lord Advocate is not answerable to the House, could we have some form of Government statement to follow the two hours of television this evening on Channel 4 about Lockerbie?

Mr. Newton: I was not aware of the position that the hon. Gentleman describes about questions being refused so I shall not attempt an immediate comment. I shall, of course, consider the point that he has made when I read it in Hansard.

Mr. Nicholas Budgen: May I remind my right hon. Friend that, in July 1994, our right hon. Friend the Prime Minister described Mr. Santer as being the right man in the right place at the right time? He no doubt then believed that that was the high point of Euro federalism. Will my right hon. Friend arrange an


early debate on the Commission's proposals for constitutional change in Europe so as to give the Government the opportunity of responding to the overwhelming will of the British people to reject all further moves towards federalism, and most of all to grasp the opportunity of using the issue to resuscitate the fortunes of the Tory party?

Mr. Newton: I have not had an opportunity to study the report in detail. There appear, however, to be some things in it with which we can agree—for example, that there should be no new powers granted to the Community, and the importance of subsidiarity. There are also quite a few things with which we, and no doubt my hon. Friend, disagree, such as the analyses of the scope of qualified majority voting, the powers of the European Parliament and the future of the intergovernmental pillars. Our views on those subjects, like my hon. Friend's, are well known.

Mr. Stephen Timms: The Leader of the House will be aware that we have just been through a period of exceptionally severe air pollution, the worst in Britain for 40 years. The committee that advises the Government on the medical aspects of pollution episodes has drawn attention to the serious health risks that arise from such episodes. Will the right hon. Gentleman offer us an early opportunity to debate the measures that need to be taken by government to deal with the problem of worsening air pollution?

Mr. Newton: I think that I was asked that question last week. I can only repeat—[Interruption.] That is an observation, not a complaint. The question leads me to repeat what I said last week: air quality is an environmental priority for the Government. That is precisely why we are bringing forward appropriate legislation in the Environment Bill, which will be enacted in the near future, to implement the widely welcomed proposals that we published in January.

Mr. Bernard Jenkin: May I draw my right hon. Friend's attention to the fact that Mr. Santer's press conference yesterday was used to publish the Commission's submission to the reflections group? Would it not put flesh on the bones of the Government's determination to increase the role of national Parliaments in the European Union's affairs if we had a full debate on the Government's submission to the reflections group? Would not that give us the opportunity to expose the fact that the Labour party wants to give away more power to Europe, is irrevocably committed to a single currency and wants to increase qualified majority voting, which is deeply unpopular throughout the country and would be detrimental to our interests?

Mr. Newton: My hon. Friend, as ever, gives an absolutely accurate account of the Labour party's position. I shall do everything that I can to help him, or anyone else, gain it wider publicity.

Mr. Max Madden: May I reinforce the remarks of my hon. Friend the Member for Leicester, South (Mr. Marshall) about early-day motion 1030, which has been signed by 68 Members from all parties? May I ask the Leader of the House to press the Secretary of State for Employment not to hide behind the directive but to urge that there is an exemption—a derogation—

throughout the European Union to allow Sikhs, wherever they live within the EU, to be able to continue wearing their turbans and not to face what they consider to be blatant job discrimination?
Would it be best for me to seek the support of the hon. Member for Southend, East (Sir T. Taylor), who could add the matter to his list of demands for the forthcoming intergovernmental conference? Would that be the best way of resolving this objectionable issue, as a matter of urgency?

Mr. Newton: Leaving aside the hon. Gentleman's last comment, I note that he underlined what was said a while ago by his hon. Friend the Member for Leicester, South (Mr. Marshall). I cannot add to what I said on that occasion, but I shall draw the hon. Gentleman's remarks to the attention of my right hon. Friend the Secretary of State for Employment.

Mr. Patrick McLoughlin: Before next week's debate on the subject, will my right hon. Friend draw to the attention of the Secretary of State for Transport early-day motion 71?
[That this House welcomes the bid from GEC Alsthom for a 20-year service provision package, including new rolling stock, for London Underground's Northern Line and the job security which the award of this tender would bring to its factories in Birmingham and the North West; calls upon London Underground to make its tender decision strictly on the quality of the product and value for money; and commends the bid to London Underground on these criteria.]
In the motion, a number of leading Labour politicians called for the latest contract that should have been given to ABB to go to GEC. Today, they are standing up in the Chamber and complaining about what has happened.

Mr. Newton: I will certainly do as my hon. Friend requests. No doubt Opposition Members who pressed in that direction will communicate with their hon. Friend the Member for York (Mr. Bayley).

Mr. Tony Banks: May we have a debate about sport as soon as possible? I am particularly concerned that the activities of a minority of football supporters have led to the majority of supporters travelling abroad being treated as though they had no civil rights, or had left them on these shores when they went to see their team play in Europe. The behaviour of the Spanish, Italian and Belgian police has been despicable. These are important issues, and people outside who support football are concerned about them.

Mr. Newton: I note the hon. Gentleman's concern. There is currently a wide interest in a number of issues concerned with sport, and I shall bear his request in mind.

Mr. Harry Greenway: May I support the calls for a debate next week on pollution of the atmosphere—particularly in London, where, paradoxically, the better the weather the more polluted the atmosphere seems to be? Will my right hon. Friend assure me that provisions in the Environment Bill will allow measures to be taken to control vehicle exhaust emissions, which seem to be the main culprit in producing dangerous and obnoxious pollution in London?

Mr. Newton: I cannot make the precise promise that my hon. Friend requests, but I have already referred to


the importance that the Government attach to the matter, and have said that I expect a debate to be possible at an appropriate time.

Mr. Paul Flynn: When may we have a debate about the worrying trend for people to do jobs that are beyond their training or ability? In the past, we have heard of a hospital porter and a nurse acting as assistant surgeons; today, we hear of school dinner ladies acting as teachers during teaching time in a school in Bournemouth.
Did not the public express great concern about the matter last Thursday, when they sent the thunderous, deafening message that they consider one person to be doing a job way beyond his abilities or attributes? Should not the Prime Minister take on a job that is suitable to his character, becoming a bus conductor or perhaps a rose grower?

Mr. Newton: What can I say? I have never heard such a barmy question: that applies to all its ingredients.

Mr. Nigel Evans: Has my right hon. Friend seen early-day motion 1111?
[That this House deplores the deceit of the Labour Party in failing to declare a figure for the national minimum wage; notes the report in the Guardian of 10th May that the husband of the honourable Member for Peckham, Mr. Jack Dromey, and challenger to Mr. Morris for the TGWU leadership, said that the TUC should campaign to persuade Labour to adopt a minimum wage figure of between £4 and £5 per hour before the election. He said he was confident that the TUC's policy will be £4 per hour-'indeed, if you look ahead two years, it may be closer to f5 per hour … we should seek support for that from the Labour Party': further notes that studies by the OECD and IMF have stated that the policy of the minimum wage would cost jobs; recognises that a minimum wage in Britain of £4 per hour, with only a half restoration of differentials would cost 750,000 jobs; reminds the honourable Member for Peckham of the comment of the Deputy Leader of the Labour Party on LWT, 25th May 1992 that 'I knew the consequences (of the minimum wage) were that there'd be some shake out (in the jobs market), any silly fool knew that'; and calls on the Labour Party to come clean on the level of the minimum wage and end this gross deceit of the British people.]
The motion contains Labour's plans for a national minimum wage. Can my right hon. Friend find time for a debate on the concept of the minimum wage? That might give us an opportunity to tease out of the Labour party the level of such a wage. If, as expected, it would be between £4 and £5, it has been estimated that three quarters of a million people would lose their jobs, at a time when more people are being employed: 632,000 have come off the unemployment register since the end of 1992. I believe that it would be catastrophic to introduce a minimum wage in this country.

Mr. Newton: I agree with my hon. Friend. That is one of the best suggestions for a debate that I have had this afternoon. The only thing that my hon. Friend got wrong was the use of the phrase "tease out". It is increasingly clear that we shall only get anything out of the Labour party with forceps.

Mr. Mike O'Brien: May we have an early debate on the Government's policy on the

proliferation of large-scale weekend car boot sales in rural areas, which are causing great concern to the villagers of Marston and Furnace End in my constituency, and in other parts of north Warwickshire, who are having to put up with the inconvenience of large numbers of cars travelling to those car boot sales? I am sure that that is a problem in many rural areas in Britain.

Mr. Newton: I can certainly confirm that I persistently find myself caught in considerable quantities of traffic, usually on Sunday mornings in my constituency, as a result of car boot sales. On the other hand, it also has to be acknowledged that that means that the boot sales are attractive to large numbers of people.

Mr. Rupert Allason: My right hon. Friend will be aware that there was widespread concern following the collapse of the Matrix Churchill trial about the use of public interest immunity certificates, an issue which is being looked into by the Scott inquiry. Without prejudging Lord Justice Scott's recommendations, is my right hon. Friend aware that yesterday a public interest immunity certificate was issued in the Taylor case by the Secretary of State for Northern Ireland? Without prejudging the issues there, would it not be better for evidence which affects national security at least to be given in private rather than to have the evidence suppressed altogether, which is bound to cause allegations and recriminations? Will my right hon. Friend ask the Secretary of State for Northern Ireland to come to the House next week and make a statement on precisely why that evidence could not be given at least in private if it cannot be given in public?

Mr. Newton: My hon. Friend will understand that that is not a matter on which I would want to make any comment whatever from the Dispatch Box beyond undertaking to bring the question to the attention of my right hon. and learned Friend.

Mr. Dennis Skinner: Why does not the Leader of the House reconsider the request that has just been made for a debate about the minimum wage? Such a debate would allow us to explain that Members of Parliament have a national minimum wage. Every single one is on £33,000 a year and no one can starve on that. Another 200 are picking up money on the side by moonlighting. That could be explained in the debate. All those issues could be brought to the attention of the people outside. If a national minimum wage is good enough for Members of Parliament, it is good enough for everyone else. Coincidentally, is it not true that in the 30 years since my hon. Friend the Member for Linlithgow (Mr. Dalyell) became a Member of Parliament, we have not lost Members of Parliament, but we have increased the number. It was 625 when my hon. Friend came into the House. Now it is 651.

Mr. Kevin McNamara: It will be 659 after the next election.

Mr. Skinner: Far from jobs being lost in this place, their number is being increased. Let everyone have a bit of the action.

Mr. Newton: The hon. Gentleman might like to ask his constituents whether they think that the sum of money


that he is paid is worth it for having him come here and advocate policies which would undoubtedly cost a number of them their jobs.

Mr. Alan Simpson: Will the Leader of the House arrange for a statement on two items raised in today's Financial Times? The first relates to activities by National Power. I know that the Government are reluctant to intervene to tackle poverty pay, but may we have a statement on the public interest and public acceptability of National Power's decision to pay a golden hello to its new chief executive, Mr. Keith Henry, of £100,000, to supplement his meagre salary of £280,000? It would be helpful if the House could understand the Government's position on such payments.
The second, which it would be useful to clarify before next Wednesday's debate on nuclear power privatisation, is the suggestion that City investors would contemplate acquiring such shares only if the Government guaranteed a heavy discount on prices. It would be helpful, before we have a debate, for hon. Members to know whether the Government will give the City that discount.

Mr. Newton: I shall give the President of the Board of Trade advance notice of a point that the hon. Gentleman may seek to put to him next Wednesday. With regard to the first part of the hon. Gentleman's question, no doubt the point that he has raised, which is clearly one for National Power, also raises issues which might conceivably be felt appropriate for the Greenbury committee to consider.

ABB Carriage Works

Mr. Hugh Bayley: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 20, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
the announcement earlier this afternoon that the ABB carriage works in York are to close with the loss of all 750 jobs.
This afternoon, the Prime Minister claimed that the Government are no more responsible for that closure than they are for somebody catching measles. The man is suffering from amnesia. Did not his Government claim, when rail privatisation legislation was going through the House, that there would be no hiatus in rail investment? Is the Prime Minister not aware that last year, for the first time in British Rail's history, it did not place a single new order for rolling stock for London commuters? Has the Prime Minister forgotten the statement made a year ago by his own Minister of State, Department of Transport that an order would be placed by September 1994?
This closure is an unforgivable act of industrial sabotage. In this week when the country is commemorating the 50th anniversary of the victory in Europe, the Government have achieved what Hitler did not achieve in the war—the destruction of a fine British manufacturing industry. Ministers should come to the House to say, in debate, what they intend to do to provide alternative work for the 750 men who are to be made redundant.
Already this afternoon, I have had commitments from York city council and North Yorkshire training and enterprise council to provide £50,000 each to look for alternative work. Will the Government match that pound for pound from their single regeneration budget? The Government have caused this crisis. They have a responsibility to find solutions and a duty to answer in debate for that catastrophe.

Madam Speaker: I have listened very carefully to the hon. Gentleman, and I have to give my decision without stating my reasons. I am afraid that I do not consider that the matter which he has raised is appropriate for discussion under Standing Order No. 20 and I therefore cannot submit his application to the House.

Points of Order

Mr. Tam Dalyell: On a point of order, Madam Speaker. Because you have been so indulgent to me this afternoon, I feel almost embarrassed about raising a point of order, but not quite, because it is a matter of some substance. May I ask you to call, from the expert Clerks of the Table Office, for an account of the circumstances of what actually took place during the rejection of six questions to the Crown Office and one question to the Prime Minister relating to why photographs of timers rather than the timers themselves were shown to the Scottish police in relation to Lockerbie?
There is the gravest doubt as to whether evidence held by the Crown Office is authentic. For two hours this evening, there will be a film and a long discussion—I hasten to say to my colleagues that I am not party to the discussion, and probably rightly so—among serious people about what is after all the biggest crime against western civilians since 1945.
Will you, Madam Speaker, ask the Table Office whether the artful way in which the Government are bypassing Parliament by cleverly wording answers to reject legitimate questions is bringing us all into disrepute? I hold that it is a matter for you, Madam Speaker.

Madam Speaker: I appreciate the hon. Gentleman's comments about my indulgence. I do not often receive such compliments.
On behalf of the Table Office, I am grateful to the hon. Gentleman for his earlier comments about the way that it handles his questions. The Table Office volunteered an explanation to me about why it was not able to accept the questions that the hon. Gentleman mentions. I know that he knows the answer. The Table Office is simply carrying out the rules and regulations of the House to see that our procedures and orders are upheld. The hon. Gentleman has raised such issues with me a number of times. I always look very carefully at the questions that he wishes to table and I know that he is helped enormously by the Table Office and, I hope, by my office as well.

Mr. Max Madden: On a point of order, Madam Speaker. I am sorry to press your indulgence still further but you will remember that yesterday I raised with you the matter of the powers of Select Committees in relation to public interest immunity certificates. You were good enough to explain that the powers of Select Committees were not matters for you. Therefore, I have consulted the Clerks, and the guidance that I have been given is that, in their view, the powers of Select Committees to call for persons and papers includes the power to request Ministers who issue such certificates to attend a Committee to justify their action. From that, I assume that it is open to any Select Committee to exercise that power if it so wishes.

Madam Speaker: The hon. Gentleman has understood the procedure perfectly accurately.

BILL PRESENTED

CRIMINAL INJURIES COMPENSATION

Mr. Secretary Howard, supported by the Prime Minister, Mr. Jonathan Aitken, Mr. Attorney-General, Mrs. Secretary Bottomley, Mr. Secretary Lilley, Mr. Secretary Lang, Mr. Secretary Redwood and Mr. David Maclean, presented a Bill to provide for the establishment of a scheme for compensation for criminal injuries: And the same was read the First time; and ordered to be read a Second time upon 15 May, and to be printed. [Bill 121.]

Church of England Pensions

Motion made, and Question proposed, That this House do now adjourn.—[Dr. Liam Fox.]

Mr. Frank Field: I shall begin by thanking the Leader of the House for expeditiously finding time for this debate. I confess that when he said during last week's business statement that the debate would be this week, I thought for a moment that perhaps the right hon. Gentleman, who is a clever political animal, had some difficult statement in store for us today and wished to clear the Opposition Benches to ensure that the Government had an easy ride. I say that only to dismiss that thought from my mind, because he clearly acted from far nobler motives.
Some people, sometimes following genuine inquiry and sometimes mischievously, ask why the Select Committee on Social Security carried out an inquiry into the activities of the Church Commissioners and specifically into the impact of recent events on the payment of clergy pensions. In answering that, I shall recall a statement by Aneurin Bevan. Unlike my Front-Bench colleague, I am old enough to know what Woolworth's was like in the old days. Its counters were neatly divided into little boxes and nothing was priced over sixpence. After listening to Prime Minister Neville Chamberlain, Aneurin Bevan said that the speech was like a trip round Woolworth's: everything was in place and nothing was priced over sixpence.
Perhaps those who question the right of the Select Committee on Social Security to inquire into these matters have the Woolworth's mentality that life should be in neat little boxes and nothing should cost more than sixpence. I hope that, as the debate evolves, it will be clear why the Committee was involved and was concerned about this issue, and why it is the right of any Committee of the House to set its own agenda.
Although the debate may dwell on the darker side of what has happened in the Church Commissioners lately, this is also a tale of heroes and heroic events. I shall touch on the heroes at the beginning of my speech. The press nowadays comes in for a fair amount of stick because of the way in which it is said to lower public standards. If there is one recent hero in the media, it is clearly John Plender, and perhaps it says something about the close-knit community of the media that he does not seem to have gained any awards for his investigative journalism, from his base in The Financial Times, on the Church Commissioners.
One tends to think that, like organisations everywhere else, the media are a closed little body that award prizes to their friends. I have nothing against awarding prizes to one's mates. Indeed, one day I hope to find some mates who will have won some prizes, but it is of note that John Plender's work has not been publicly rewarded by' his colleagues, as one might expect.
The Financial Times is somewhat remiss in the matter. The Archbishop of Canterbury told the Committee that he first found out the full extent of the nature of the crisis from reading the Financial Times, and I would have thought that it could have been a little faster off the blocks in placing advertisements so that business men could


realise that, if they wanted to know what was going on in their company, they should read the Financial Times, like the archbishop did. John Plender is certainly one hero.

Mr. Bernard Jenkin: Surely the hon. Gentleman is not suggesting that, if the matter related to some Government quango, the media's attention would have been much more engaged, but that, because it had nothing to do with the Government, the rest of the media chose to ignore it.

Mr. Field: That was the last thing in my mind. As I have already had to confess today to one evil thought about the Leader of the House, I shall not follow the hon. Gentleman's comments.
The second hero of the story is the Archbishop of Canterbury. It is difficult to think of anyone in public life who readily takes the blame when events go wrong, but it is exceptional for someone to take the blame for events when he is clearly blameless. During the period under consideration, the archbishop was a diocesan for short time, and archbishop for an even shorter time, yet he immediately said that he, among others, was responsible for the events under discussion.

Mr. Harry Greenway: I would certainly lead efforts to get awards to the hon. Gentleman for his good work on this and other matters. Does he agree that, as a result of the actions of the Church Commissioners, the archbishop will have a new and bigger responsibility than he has had so far? He will have to give real leadership to ensure that clergy pensions are paid and that clergy and other workers in the Church of England are not undermined in terms of their pay and how and where they live. He alone can do that. I hope that he will acknowledge that, because, so far as I can tell, his position has not changed. He has the same emoluments, the same pay and all the rest of it.

Mr. Field: In considering the matter, we should get away from debates about whether the whole financial problem can be solved by bishops living in two-up and two-downs. Such decisions are for them to make. The financial crisis is so serious that it will not be solved by such matters. I have no doubt that, given the type of leadership that the archbishop has shown, he will successfully see through the crisis into which the Church has been plunged because of events at the Church Commissioners.
Immediately after the archbishop read the Financial Times reports, he announced that an inquiry would take place. The commissioners like to conduct their affairs in secret. There is much less secrecy now, thanks to the advent of Sir Michael Colman, but clearly people there still wish to conduct their affairs with as much quietness as possible and would have pushed for the inquiry to be knocked into the long grass. The establishment of a Lambeth group and the publication of a report was the last thing that they would have wanted.
I do not want the debate to pass today without us paying a proper compliment to the archbishop for his leadership, for affirming his belief in openness, and for his resistance of the 150-year-old tradition in the Church Commissioners that such matters are best sorted out in private and that, at all cost, one should stop debate erupting into the public domain.

Mr. Greenway: I support what the hon. Gentleman has said. Does he agree that the Church of England will be in

the position somewhat of, say, the Church in Australia? Its members will have to raise the stipends of priests and others. Leadership and inspiration to achieve that will have to come from the archbishop. People will be looking to him for that.

Mr. Field: I agree with that. I shall touch on that point later, if I may, but I do not think that we shall find the archbishop wanting in that respect.
Sir Michael Colman is the third hero. It would not be amiss if I told the House that, when Sir Michael first came before Committee members, we asked him to introduce his team. He introduced with ease those who were sitting with him at the table, but he somehow thought that we meant that he should introduce the whole of the party from the commissioners, and he found some difficulty in doing so. I caught the eye of two of the Conservative members of the Committee. They were looking at one another and the expression on their faces said, "Oh dear, we are clearly going to have some difficulties here."
By the end of that meeting, however, the honesty with which Sir Michael had answered our questions was such that the whole Committee was won over to him and had a certain admiration for the qualities that he was bringing to his task. I give just one example. When one of the Committee members asked him about activities in the Church Commissioners, he said if they had gone on in his company, that would have been unlawful. There was no pulling of punches, no wish to disguise, no intention of hiding the seriousness of the events under consideration. It is good news that Sir Michael was chosen; the way in which he has gone about his business since then is also good news.
The last events that I shall describe as heroic—because they are events and not people—relate to the commissioners' pay and pensions record. They have been slightly defensive about, and critical of, the report in that they believe that it should have emphasised their record more. I am sure that other hon. Members will rightly do so, and I have no wish to steal their thunder, but it is important to understand that the reason why the Church Commissioners are there, and the reason why they have stewardship over national resources, is to pay pensions and to help supplement stipends. I am anxious to compliment them on their record, but they are in business to do that.
Let me turn to the main substance of the debate, to its seriousness and how it will impact on the established Church and the parish system. It is important to put on record the fact that, because of gambling with borrowed money and speculation in the property market, at least £800 million of the capital base has been wiped out. It does no one any credit when some in the Church Commissioners continue to pretend that that had something to do with the movement of markets.
In our report, we cite funds that, although not identical—no fund is identical to the moneys held by the Church Commissioners—are similar to the portfolios held by the commissioners. We showed that, in the period during which the capital base fell by £800 million, other funds were successful in increasing the real value of their capital base. Therefore, I hope that, from this day, we shall have no more of such talk and complacency, with some commissioners still peddling, in public debates, the idea that the markets are really accountable and responsible for what has gone on.
The charge against the commissioners is simple. By their actions, they have so undermined the capital base that the stream of income to the commissioners has been permanently curtailed. If there had been wiser stewardship, the capital base would not only have recovered to the extent that it has recovered in the past few years, but become much larger.
The second impact of the commissioners' actions—apart from up to £800 million being wiped off the value of the assets—is that, because the Church is now plunged into such a crisis over the payment of pensions, a sum will have to be transferred from the much-reduced capital base into a pension fund to meet past pension commitments. In a moment, I shall discuss the sums that the Select Committee recommended. At a minimum, one is talking about £700 million to £750 million. If we add together what will need to be transferred and what was needlessly lost from the capital base, we see that we are talking about a period of stewardship that has almost halved the size of the capital base that the Church Commissioners had not many years ago. That is a record of which most people would be ashamed.
A number of sores remain, to which the Select Committee drew attention in its report, and which will not go away. Some of my hon. Friends, if they manage to catch your eye, Mr. Deputy Speaker, will raise those issues, so I shall not dwell on them in detail, although I want to list them.
The first is the string of private companies that the Church Commissioners established so that they could undertake some of the property development work. The procedure was designed so that they could get round the legal limits on exempted charities. There are many private or joint property companies. Last night, the Church Commissioners kindly put on the board for me, and for other hon. Members, perhaps, a note that they had prepared on these bodies. The list was too large for me fully to digest before the debate today, so it is a matter to which we shall return.
I cite one paragraph of our report, which shows the activities in which the Church Commissioners were engaged. I refer to paragraph 3 of appendix 10, which is a letter from the National Audit Office to the commissioners. It says:
The Commissioners have paid out £3.2 million ostensibly for professional services provided by CC Projects but for which no services have been provided. Indeed the company has no staff".
Those sums, which were moved around to overcome the restrictions placed on the commissioners to prevent them from eroding their capital base and converting it into income, are of continuing concern to many people. The role of those companies will not go away.
The second issue that will not go away is what is euphemistically called the Ashford great park development. I use the word "euphemistically" because, according to the pictures I have seen, the area is still farm land. No development has taken place and no planning permission has been gained, but £80 million has been spent on the site. The Select Committee's recommendation was that the archbishop should seriously consider establishing a further committee of inquiry to examine how £80 million could disappear from the

commissioners' assets into land that is not terribly good farming land and that remains without planning permission.
I am almost lost for words in trying to describe how £80 million could have been spent on that development. A careful investigation to try to trace those to whom that £80 million went from the commissioners might yield some interesting answers, and might even result in some people wishing to pay back some of the funds to the Church Commissioners.

Mr. Geoffrey Clifton-Brown: Is not the whole investment in Ashford symptomatic of what happened in the crisis? The Ashford development was not mentioned in the Church Commissioners' reports until 1991, by which time £72 million had been spent on it. It was valued then at between £10 million and £20 million, and today it is valued at £3 million. The problem was the secretive way in which the commissioners went about their work. They did not tell anyone who was closely involved with the Church what was going on under their investment policy.

Mr. Field: It is worse than that. From looking at the annual reports, one could be fooled into thinking that the Church Commissioners were being open. Property portfolios were listed by value, up to certain sums. None of the figures was incorrect, but some of them were misleading. For example, a huge shopping development in the north-east which cost £360 million could be put under the heading of developments of more than £20 million. Although it would not be wrong to say that that development cost more than £20 million, some might think that the information was there to mislead people rather than to help them to have an informed debate. I very much endorse the point about secretiveness made by the hon. Gentleman.
The third issue that will not go away—the Select Committee has recommended that we follow it up—is the role of the National Audit Office in this tale. We asked the commissioners to provide us with their correspondence with the National Audit Office, which had been established as their auditor. We shall want to know why, for example, over the years, when the National Audit Office expressed its disquiet at some of the activities of the commissioners, and particularly at the way in which they presented their accounts in public, so little attention was paid by the commissioners to that, and why the National Audit Office did not take matters further. The Select Committee has already decided that it will look at that issue in greater detail at a later stage.
I now focus on some of the issues about which I and my hon. Friends are concerned and which help to point the debate to the future. I had intended to bill the first issue as the question of openness, but the hon. Member for Cirencester and Tewkesbury (Mr. Clifton-Brown) put the other side of the tale and referred to the commissioners' excessive secrecy. There is a need for the archbishop and Sir Michael Colman to break the culture of secrecy within which the commissioners have worked for more than a century. It will be hard for the commissioners, who have served long in the commission, to throw away this wretched habit—one can get hooked on such things—but it is necessary for them to do so.
I quote from a letter from Dean Webster which I received this morning and which illustrates the strength of the secrecy. He says:
I was a Church Commissioner for fourteen years and served on the Board of Governors, the Assets Committee and the General Purposes Committee. The borrowings for property investment and the CC Projects were never revealed to the Commissioners.
That letter is from somebody who was at the very heart of the elected structure of the Church Commissioners. He was excluded from the key decisions, not only in the preparatory stage and in their execution, but for some time after the decisions had been executed. The first thing that the archbishop and Sir Michael Colman must do is break the culture of secrecy to which so many of the long-established commission staff are so addicted.
Secondly, the Government need to look at exempted status for the commissioners and for other charities. Not so long ago—in 1985—the House passed, almost with acclamation, the Charities Act. In our debates then, we were assured that the exempt charities would continue their status and we were told how well run they were. The commissioners are an exempted charity, which raises questions about who advised Ministers on how exempted charities were run. Those questions obviously centre on the Church Commissioners today but also go beyond them to the other exempted charities.
There are two other important matters: the pension fund and the reform of the commissioners. There are clearly those who are pushing, from among the commissioners and, no doubt, from within the Synod, the view that a very large sum of money should be taken from the remaining assets of the Church Commissioners and transferred to a pension fund. The Committee is anxious that a pension fund should be properly established. It is anxious that that will, in a sense, act as the outward, visible sign to those who are retired or have earned pension commitments that past pension commitments will be met. It seems to us the proper way to advance.
We are not mindful to advocate that the sort of the sums suggested by the chairman of the pension board should be transferred into that new fund. We went for the lower figure, which Sir Michael Colman put forward to the Committee, about £730 million. That may need to be topped up in the future, but it ought not to be so topped up now that the commissioners are crippled in doing any of their other work or so that we would need another Bill before Parliament to transfer any surplus funds back to the commissioners. We need to establish a fund and it needs to be properly, but not excessively, funded.
The second major reform that follows from what I have said and from the inquiry that the Bishop of Durham is conducting involves the changing structure of the commissioners. That great reforming Prime Minister Robert Peel, when he first established the Ecclesiastical Commissioners, created a tightly drawn body of people who worked hard, made the decisions and ensured that they were carried out.
It was only when the bishops felt left out, and the other clergy felt unrepresented, that Lord John Russell extended the Church Commissioners to their present scope. We believe that the body needs to return to being the tightly organised, effective group that Peel originally established. However, in considering how to effect that and the pension fund, the question arises as to whether they should be dealt with by a Measure or by a Bill. Some people have all too readily ascribed to some of us who

are pleading for a Bill motives that they would not wish to be ascribed to themselves. When I debate the issue, I try to put aside partial affections for the Church of England and view things as rationally as possible.
It seems to me, as I hope that it seems to other hon. Members, that if those two major reforms come to the House as Bills, the House will be able to debate them fully and amend and improve them if need be, before they become effective. I am told that there are some in the General Synod who will wish to move by a Measure. A Measure, put simply, will mean that we shall have an hour and a half of debate. We shall not be able to amend it in the way that we could amend a Bill. We shall be able only to approve or to reject it.
Before those siren voices in the Synod try to gather support for that campaign, let me again detail the difficulties that the House had when considering the Measures dealing with women's ordination and compensation. We were told that those Measures were linked, and that we could not debate them separately. Perhaps we should have probed whether that advice was correct. My view is that the House would have approved women's ordination by something like 500 votes to 10 votes and disallowed by not quite such a wide margin the Measure that dealt with compensation. Those of us who wanted women's ordination felt trapped because we had to support a compensation Measure that put us in the position of paying people to exercise their consciences.
Many of us pleaded that the Church should be as tolerant as possible of those who did not agree with the reform introducing women's ordination—after all, before the vote, they were in the majority. However, if those people decided that it was so abhorrent to them, they should have left as non-jurors, and gone without the money. Our views were not heeded. Not only is compensation costing about £3 million a year—it might eventually cost the Church £50 million—but it is clear that some unscrupulous clergy are using the Measure as an early retirement deal rather than in connection with their objections to women priests. Had we had the chance, the Church would have had its Measure on women's ordination, and that on compensation would have been rejected.
We need a Bill, because the necessary legislation will be immensely complicated. Any complicated piece of legislation can be improved by open debate. There is nothing to lose by having such a debate. The House does not want to overturn the 1919 enabling legislation. That is accepted. We argue that the issues of the pension fund and changes to the Church Commissioners' constitution go beyond what was envisaged in the 1919 legislation, which delegated to the Church the authority to act on legislative matters within its day-to-day running and to bring more significant changes in the canons over to the House to be approved. We now want to change a structure which had been approved before 1919 and, therefore, I hope that wiser counsels will prevail in the Synod when it debates whether Measures or Bills will come to the House.
We take an interest in this matter not only because of pensions and the need to safeguard the pensions of people who are already pretty poorly paid but because we know that parish priests everywhere carry out an important role in our constituencies. However, we are also interested and involved in the debate because the Church of England predates the state. It is impossible to think about English


history without thinking about the Church of England. When the modern state was invented, the Church was coterminous with it. It is only much more recently, with growing secularisation, that there has been a clear division between the two.
It is as an English person that I speak today. I am grateful for the role that the English Church has played in our national life and much concerned about the future of that role, given what has happened to its historic resources, the gambling with borrowed funds in the property market and the need to create a pension fund with some of the remaining capital.
It is because I am concerned to try and get the right decisions for the Church of England that I have approached this debate, and the Committee's report, in this way. I hope that it will find favour on both sides of the House.

Mr. Michael Alison: I congratulate the hon. Member for Birkenhead (Mr. Field), in his distinguished capacity as Chairman of the Select Committee on Social Security, on having taken the initiative in including the Church Commissioners in his Committee's comprehensive study of pension funds. I congratulate him and our other parliamentary colleagues who have served on the Committee on its examination and for the thorough-going and assiduous study that they have made of the Church Commissioners' fortunes in the widest, and also in the narrowest, sense. The resulting report, whatever else one may think of it, is a veritable encyclopaedia of useful and essential facts about the commissioners and their responsibilities.
As the Church Commissioners are directly and specifically accountable to Parliament, as well as to the Church of England, today's debate and the report that we are debating are both timely and relevant. Many of our constituents have a direct or indirect stake in the issues raised in the Committee's examination.
In his eloquent and intriguing speech, the hon. Member for Birkenhead produced his tripod of heroes—the journalist, the archbishop and the First Church Estates Commissioner. I endorse entirely his designation of those heroic figures. I only wish that I could label as heroes all the members of the Social Security Committee, including its Chairman. The trouble is, there are no heroes in Parliament. If one is a hero on one side of the House, one is an anti-hero on the other. Nevertheless, the hon. Gentleman and his colleagues have done a splendid job.
Paragraph 17 of the report, a seminal paragraph, refers to the significance of losses. It mentions the £800 million loss, putting the word "loss" in inverted commas, thereby slightly pulling the punch. In a verbal presentation, which the hon. Member for Birkenhead has just given, it is beyond the wit of man to include inverted commas.
Nevertheless, the famous paragraph 17 about the losses could be set as an examination piece for candidates aspiring to be journalists, archbishops or Church Commissioners. It could examine the way in which losses can be presented as grotesque and unbelievable or as not nearly as bad as they appear. There are many different ways of looking at the figures. The hon. Member for Birkenhead produced a slightly gloomier version in his

speech than he did in his report. I make no complaint about that, because his report has laid bare many important and significant figures.
My inescapable role today is to speak on behalf of the Church Commissioners. I shall focus on the Select Committee's main recommendation which is that a separate, contributory pension fund should be established for future clergy pensions. The need for that was spelt out in the hon. Member for Birkenhead's speech and is mentioned fully in the report. It is vividly illustrated by the figures in table 1 of paragraph 15, again a seminal paragraph and set of figures.
The commissioners are 100 per cent. responsible for clergy pensions, and the larger the growth in the burden of pensions, the smaller is the contribution by way of subsidy that the commissioners can make in other directions such as the day-to-day costs of the clergy and the parishes. I am glad to be able to tell the House that, having worked intensively on a package of pension reforms since last autumn, the Church of England has been able to reach broad agreement on the establishment of a new contributory pension fund for future service.
At a national conference held a fortnight ago, the Church Commissioners, together with the Church of England pensions board, representatives from the 43 dioceses in England and the central board of finance—the General Synod's financial agency—agreed the principles and guidelines for setting up the new fund. It will probably be in place from the beginning of 1998. The little list that I have given of all those involved in the consultation and agreement is a vivid illustration of the complex intermeshing of interests and representative groups, organisations and administrative and executive bodies which make up the differential which drives the axle in the Church of England. It is difficult to escape from that clumsy and, in some ways, easily overheated piece of administrative machinery.
From the beginning of 1998, the Church Commissioners' pension liabilities will become limited and calculable because of the proposed cut-off point of liability, and the new contributory fund will start on its era of future liability. It will be the dioceses—ultimately, the parishes and their individual supporters—that will be the contributors, not the pensioner beneficiaries.
I shall list the recently agreed guidelines which will be presented to the Church of England General Synod for discussion and ratification in July this year. The first is a recognition that the present financial subsidy from the Church Commissioners to the ministry of the Church of England cannot keep up with the growth in its current and prospective costs and that the laity will have to contribute more. Sir Michael Colman—I am delighted that he made such a splendid impression on the Select Committee when it took evidence from him—in a heartfelt aside when being examined by one of the hon. Members present today, asked:
Do you realise that pensions in payment in the Church of England have increased from £18 million in 1981 to £70 million today?
That was in December 1993. It is an illustration of the gigantic growth in pension liability and of the unavoidable necessity of getting extra lay support.
Secondly, extra contributions from the laity will have to be forthcoming, via parochial and diocesan contributions, to the new separate fund to provide support, particularly for the cost of future pensions. In effect


active parishioners will have to recognise for the first time that the cost of a future pension for a serving clergyman is part and parcel of the current cost of maintaining him in his daily work as an incumbent. They are already quite used to supporting and sustaining him in that daily work.
Thirdly, the commissioners have confirmed their continuing ability to meet their existing liability for past service, including pension increments. Fourthly, transitional measures will have to be put in place to help poorer dioceses and parishes to work up their pension contributions. Finally—the hon. Member for Birkenhead touched on this in an important passage in his speech—legislation will be needed to give the Church Commissioners the power that is at present denied them to use their capital for pension purposes. I shall talk more about legislation in a moment.
I hope that the House and the hon. Member for Birkenhead will feel that considerable progress has already been made in the essential dimension of pension security, which has, in many ways, been the Select Committee's overriding concern. The report's recommendations in that area are, in some ways, an endorsement of what is proposed as much as a trigger for change. They are none the less welcome for that.
The Select Committee in its report and the hon. Member for Birkenhead in his speech have been trenchant and unsparing in their criticism of the stewardship of the Church Commissioners in the recent past. I am glad that they have also been positive and constructive. It might help if I summarise briefly how the commissioners have sought to respond to constructive criticism. I do not believe that they can be accused of complacency. After all, in July 1992 the Financial Times article—the manifestation of the first new hero of the hon. Member for Birkenhead—picked up and blazoned in a headline story the serious implications of financial malaise that the 1992 Church Commissioners' annual report had somewhat over-technically and guardedly laid bare.
The Select Committee's report reasonably and fairly states in paragraph 3:
The Archbishop of Canterbury responded immediately to this news by establishing an inquiry (known as the Lambeth Group), whose report was published in July 1993.
That is the first appearance of the second hero, and I am delighted that the hon. Gentleman gave the archbishop credit so early in his report for a response to that article. Much had already been studied, scrutinised, suggested and set in train by the time that we had reached today's debate. Incidentally, members of the Lambeth group represented a majority of non-commissioners over commissioners.
The group's 1993 recommendations have been acted on vigorously and promptly. On receiving the Lambeth group report, the Church Commissioners' board of governors immediately put in hand the pension fund reforms to which I have just referred. To assess long-term liabilities, an eminent actuarial firm, Watson, was appointed to give independent actuarial advice on our expenditure commitments, particularly clergy pensions. Its findings echoed those of Bacon and Woodrow, another leading actuarial fund which had provided similar advice to the Lambeth group two years ago. The Watson report provided the actuarial basis for the on-going work of the funding of clergy pensions.
The board tightened its regulation and oversight of the Church Commissioners' Assets Committee, which is effectively the investment engine room of the Church

Commissioners. The board established an independently chaired audit committee in 1993 to scrutinise matters relating to, among other things, the appointment of an external auditor, the presentation of the commissioners' accounts and internal financial controls, and to consider any representations made to it by any person. On the matter of the appointment of an external auditor, we have consulted the Treasury, as we are required to do in the 1947 Measure governing the commissioners, and have been given the go-ahead to embark on a selection process.
An independent firm of surveyors were appointed in the spring to scrutinise the commissioners' property portfolio and to give strategic advice on it. The commissioners' new property group is working with the benefit of that advice. It is worth noting that the report by the surveyors found that, with few exceptions and taking into account certain admitted imbalances, the commissioners have a prime UK property portfolio.
The commissioners have long acknowledged, however, that we are too heavily weighted toward property in our investment portfolio and that re-balancing needs to take place. That is happening. For example, the House will probably know that the Metro centre in Gateshead is up for sale. That highly successful shopping centre, owned by the commissioners, is expected to fetch a sale price well above cost.
To strengthen internal management—

Mr. Jenkin: Will my right hon. Friend give way?

Mr. Alison: Certainly.

Mr. Jenkin: I hope that my right hon. Friend will forgive me, but I hear in his comments an echo of some of those made when the Select Committee was taking evidence. The Church Commissioners may well have a prime portfolio, but the Committee's assessment, from the evidence that it took, of the internal rates of return on the money invested simply does not match what the commissioners should have been able to generate. It is most important to emphasise that point. The Church Commissioners may well have some prime properties, but the prices that the commissioners paid for the development or purchase of them has never been justified by the returns.

Mr. Alison: My hon. Friend has to bear in mind the fact that the property portfolio taken in the round includes the agricultural estate. That estate is inherited and we have no control over the assets contained in it. The returns from each farm vary considerably and significantly and are themselves subject very often to rent controls, over which we have no real power or authority. Taking the property portfolio in the round and discounting the fact that we have very little control over the agricultural sector and very little ability to change the assets or get out of a particular farm, because of the tenancy restrictions, and isolating the property assessment purely to, let us say, commercial or retail shopping premises, the returns could be seen to be somewhat better, given manifestly failed enterprise investments such as Ashford great park, than my hon. Friend suggests. Certainly, for the most part, such investments were the result not of wild speculation but of considered advice from reputable agents such as Chesterton.

Mr. Jenkin: There may well be a residual agricultural property holding with the commissioners, but that does


not explain why, for example, as table 3 in paragraph 35 shows, UK retail property rose from 7 per cent. of the portfolio to 32 per cent. of the portfolio by 1993. The Committee also demonstrated in the report where the quality of advice and analysis of those retail developments was substantially lacking.
I return to my main point. The money invested by the commissioners in retail property as a portfolio is not justified by the holdings of the Church Commissioners. It is incumbent on all the commissioners to be realistic—I am not questioning my right hon. Friend's motives in any way at all—about the fact that the performance of their property portfolio has been very disappointing indeed.

Mr. Alison: With the indulgence of the House, I shall repeat the point that I was making when I initially gave way to my hon. Friend. The commissioners have long acknowledged that they are too heavily weighted towards property in their investment portfolio and that re-balancing needs to take place. I make no bones about that. I do not dispute that, within that over-extended investment, there have been some disastrous investments.
I am reasonably arguing, however, that, within an over-extensive cornucopia, there are some good, solid assets which have been bought and in which we have invested on the advice of reputable, competent professionals in the field. I am trying to explain ways in which we are seeking to improve the advice and control that are to be put in place increasingly under Sir Michael Colman's leadership. That will mean that more and more highly competent professional advice will help us to isolate and pin down assets within a much smaller property portfolio, which will produce the kind of returns which my hon. Friend is correctly seeking and postulating.

Mr. Clifton-Brown: An examination of each section of a commercial pension fund against an index of performance of other pensions funds is undertaken every quarter at least. In his capacity as a Church Commissioner, would my right hon. Friend tell us whether that happens in the Church Commissioners' fund? In his opinion, is the re-balancing happening—quickly enough? The Lambeth report recommended that the property section of the fund should be reduced. I note from the Social Security Select Committee report that a normal commercial pension fund would have a property portfolio of no more than 16 per cent. whereas, even today, the Church Commissioners' property portfolio is 32 per cent.—double the amount.

Mr. Alison: My hon. Friend is slightly misconceiving the nature of the Church Commissioners' assets and investments portfolio, because it cannot properly be described as a pension fund or even he considered analogous to a pension fund. It is not a closed pension fund with regular income flowing into it. It is quite a different kind of investment portfolio for which no new money comes in.
In relation to its income, it is possibly over-capitalised. The problem is not too much capital but too little income flowing from it. To attempt to regulate and assess it, and measure it by reference to a proper pension fund is misleading and precisely one of the difficulties which has arisen in focusing the management of a fund which was

not originally a pension fund. It had no new money coming into it, but it began to manifest vast new pension-oriented obligations, which, not being a pension fund, it was not properly equipped to dispose of or to handle.
In reply to my hon. Friend's intervention, may I say that I do not think that Sir Michael Colman, his advisers and, probably, the Church of England's pension boards look at the assets of the Church Commissioners, now and in the future, in precisely the same way as those responsible for a closed pension fund of, for example, a trade union, would assess and evaluate it. They are two different creatures.

Mr. Clifton-Brown: I fear that my right hon. Friend has slightly missed my point. Any investment fund can be measured on its performance against a basket of other funds. Therefore, it is quite possible to measure whether the Church Commissioners' fund in agriculture measures up to other pension funds in agriculture. It is quite possible to measure whether the Church Commissioners' equity fund matches the equity performance of other funds. Can my right hon. Friend tell me whether the Assets Committee or the commissioners regularly review their own performance against an index of other funds?

Mr. Alison: Indeed they do. They do not necessarily always compare the fund with other pension funds, but they compare it with other comparable investment holdings and investment trusts. The assets of the fund are regularly measured, and we in the Assets Committee get regular sight of comparable movements. The fund is not assessed and evaluated in terms of its performance precisely as though it is a pension fund. It is reasonable that it should not be so assessed.
I should like to elaborate on the attempted responses that the Church Commissioners have made to the criticisms of the hon. Member for Birkenhead and those of the Lambeth group. We have sought to strengthen internal management by creating two new professional posts on the Church Commissioners' staff. One is a deputy secretary responsible for finance, Mr. Christopher Daws, who wrote to the hon. Member for Birkenhead, who, in turn, mentioned that letter today. The other post, that of chief surveyor, is now held by Mr. Andrew Brown, who is in charge of the property portfolio.
They are both highly professional officers. Mr. Brown has been working in particular on long-range financial planning. It can therefore be said that we have acknowledged past mistakes, heeded criticism relating to them and acted on them in every area. I hope that the House will agree that such swift and comprehensive action for reform is not evidence of complacency.

Mr. Simon Hughes: In advance of the Turnbull report, have the processes followed by the commissioners been relaxed, so that meetings are open rather than closed, to enable members of the General Synod and others to attend? Has any attempt been made to make the organisation far less hierarchical? The only representatives of the ordinary members of the Church appear to be deans, who are hardly at the bottom of the hierarchical pile when it comes to representing the person in the pew. It does not look as


though the organisation has been subject to much democratic scrutiny so far. Has that failing been noted and has it been, or is it about to be, corrected?

Mr. Alison: I am bound to tell the hon. Gentleman that, in advance of the Turnbull report and the recommendations of the Select Committee on Social Security, apart from a fresh breath of stimulating air and ozone that has come through the arrival of Sir Michael Colman and the appointment of the two important new officers, whose names I have just given—after all, "the spirit giveth life", not the body necessarily—no fundamental structural changes have yet been made. The proceedings of the committees are governed as heretofore by the same regularity, membership and attendance.
There is no point in tinkering with that aspect of the machinery, which is under the intense scrutiny of the Select Committee and Turnbull, in advance of what those experts will deliver to us. Nothing fundamental has changed in the mechanics and nuts and bolts, but a new spirit is abroad in the commission as a result of the appointment of the new First Estates Commissioner and the new leadership.

Mr. Frank Field: I talked in general terms about complacency, which was unfair on the commissioners' staff. The right hon. Gentleman has been clear about how matters have changed, but, on 24 April, the first, leading letter published in The Times came from Mr. E. G. Nugee QC. Much of that letter revealed such complacency. In the House we are expected, even pre-Nolan, to declare interests. That gentleman could have well declared his interest because, if I am right, he was the commissioner to whom other commissioners went for a legal opinion on whether the commissioners could borrow. They did so to pursue the wretched policy that has led to the events that we are debating today.
Mr. Nugee gave a legal opinion on what the commissioners' position would be on borrowing. That was a highly contentious opinion. The Select Committee asked for that opinion, but we were given only part of it. We did not press our powers to ask for all of it. Mr. Nugee then had the nerve to write to The Times and referred to "loss", suggesting that, somehow, the market brought about the paper losses. I had in mind people like Mr. Nugee when I spoke about complacency. I did not have in mind the good members of staff who serve the commission well, the new breed of staff who are coming in or the first three Church Estates Commissioners currently in post. A group of commissioners, however, are still unbelievably complacent about their stewardship.

Mr. Alison: The hon. Gentleman has introduced a non-hero to offset the three heroes whom he presented to us earlier. I am not responsible for that non-hero—alas, I wish that I could be responsible for the three heroes who were presented to us earlier. I am responsible for neither.
Mr. Nugee's letter was not stimulated by me and I doubt that it was stimulated by Sir Michael Colman or his staff. Mr. Nugee expressed his own views, but, to do him justice, he mentioned the £800 million "loss", as does the Select Committee in the famous paragraph 17 of its report. Mr. Nugee has done nothing more significant than to quote a relevant passage from the report of the hon. Member for Birkenhead.
As I have said, there are various ways of presenting a fascinating assemblage of figures—paragraph 17 of the hon. Gentleman's report has produced such a fascinating

assemblage of figures. Mr. Nugee, our new anti-hero, has produced an interpretation of those figures with which I know the hon. Gentleman disagrees. I am not responsible for Mr. Nugee, but I take note of what he has said. It is reasonable for someone like Mr. Nugee to demonstrate that there are different ways at looking at sets of figures. Statistics are notoriously malleable and elusive when one tries to pin them down to reveal the reality and their ultimate truth.
The hon. Member for Birkenhead referred to legislation. Let me focus at once on the Select Committee's recommendation that legislation to set up a separate pensions fund and to reform the Church Commissioners should be enacted by a parliamentary Bill rather than a Measure passed by the General Synod and subsequently considered by Parliament. Although there is likely to be much common ground between the Church of England and the Select Committee on other recommendations contained in its report, I fear that there will not be quite such ready agreement on that recommendation.
There is likely to be a strong objection to the proposal for several compelling reasons, as the Church of England sees it. The Select Committee bases its argument for a Bill on three grounds. First, it argues that the historic resources of the Church of England were contributed to directly by the monarch and that they belong not to the Church but to the nation as a whole. Of course the resources of the Church of England are at the service of the nation as a whole, and it intends that they should remain so, but, as the Church would argue, they derive mainly from Church, not state, sources.
When the assets of Queen Anne's bounty and the Ecclesiastical Commissioners were combined in 1948, 32 per cent. came from Queen Anne's bounty, but 68 per cent. from the Ecclesiastical Commissioners, whose assets derive from Church sources. Those are resources, in short, in which the state and the nation both have a proper interest, but the Church of England has a proportionately greater one, according to those figures.
Secondly, the Social Security Select Committee argues that a Bill would maximise the opportunities for debate on the future of the Church Commissioners. However, although a Bill would undoubtedly maximise the opportunities for the opinions of the House and of another place to be taken into account, there remains as a result an acute dilemma. It would necessarily deprive, to that extent, the Church of England of an opportunity to have, through the elected members of its General Synod, a parallel and proper voice—at least in terms of the constitutional understanding dating from 1919.
The matters that we would debate in a Bill in the House are crucial to the future of the Church of England. A Measure, it can be argued, first debated in Synod and then in this and another place, would give an opportunity for all the interested voices to be heard.

Mr. Frank Field: No one disputes that we could hold a debate on it, but we could not amend it. Surely there is nothing to prevent Synod from debating the Bill before it came to this place and another place, so that it goes through all the stages that we would go through.

Mr. Alison: Later I shall suggest a way in which one might proceed roughly along those lines.
Thirdly, the Social Security Select Committee argues that there is an urgent task in deciding to whom the commissioners should be responsible and that an Act of Parliament would appear the least contentious way of resolving that. Alas, I am advised that a Bill would be very contentious—at least, in Church of England eyes.
In 1919, Parliament decided to delegate a significant, although not a final, say in ecclesiastical legislation to the Church of England through the Church Assembly and its successor, the General Synod. In the past 75 years, Church and state have held to that understanding, including at the time the Church Commissioners, who were brought into existence, by Measure, in 1947. If a Measure were the right course then, it is arguably the right course now.
The arrangements for legislation on Church of England matters in the Church of England Assembly (Powers) Act 1919 embody a partnership between Church and Parliament. It is a balanced partnership, in which both parties have a voice. As a member, like the hon. Member for Birkenhead and others, of the Ecclesiastical Committee, I am, however, well aware of the frustration that several of my colleagues and I feel at their inability to influence the details of legislation on Church matters. It is a take-it-or-leave-it position.
I can tell the House that the Church of England authorities are ready to consider ways in which Members of the House and of another place might be enabled to express their opinions in connection with the details of legislation on the important matters covered by the report, and likely to be contained in any prospective legislation. In other words, my heart is with what the hon. Member for Birkenhead seeks to secure. I believe, from comments made by Sir Michael Colman in the evidence that he gave to the Social Security Committee, that he would be only too happy for Parliament to have an important say in all that.

Mr. Alun Michael: I should be grateful if the right hon. Gentleman would explain what he proposes. I intend to mention that issue in my remarks. I felt that there was a certain circumlocution in what the right hon. Gentleman said. What precisely is he suggesting?

Mr. Alison: To be honest, we have not worked through the ways in which there might be variations on the existing machinery of the General Synod, through its Legislative Committee, sending across a Measure to our Ecclesiastical Committee, but it might be possible to turn the Ecclesiastical Committee into a type of Standing Committee to consider a Measure before it is crystallised in final Measure form, so to speak.
I shall attempt to elaborate what might happen. A tentative Measure might be informally passed to the Ecclesiastical Committee, so that we had the chance to consider it, make suggested amendments, take evidence about it and send it back, before the whole thing was crystallised and came across as an unamendable Measure.
It is not beyond the wit of man to think of a way in which that might be considered. However, we are seeking to discover whether an experimental innovation would be

feasible, to satisfy the aspiration that we have in the House to get into the text and detail of a legislative proposal on a subject that is very important to Parliament.

Mr. Michael: If I understand him correctly, the right hon. Gentleman continues to suggest that the Measure would come before the House in a means that was not open to full debate, amendment and the type of consideration that the members of the Select Committee considered appropriate.

Mr. Alison: It would not come before the House to the Chamber of the House, sitting as a Committee of the whole House. However, it might come to the Ecclesiastical Committee in a form in which that committee was asked what amendments it might want to make if the Measure were to come before it in a full-bodied Bill form and, in that tentative way, return to the Legislative Committee of the General Synod with our suggested amendments before the full original panoply of unamendable Measures came before the Ecclesiastical Committee and the House.
I think that the hon. Gentleman has agreed that in that respect there might be some scope for innovation, but that is a tentative, uncharted area, so I do not pretend that it is definitive.

Mr. William Powell: I wonder whether that can be right, because the Ecclesiastical Committee is not a Committee of Parliament. It is a statutory committee, set up by Act of Parliament in 1919, and the only things that it can do are those matters that are laid down in the statute itself. Therefore, if my right hon. Friend suggests that the Ecclesiastical Committee should proceed in a way that is not laid down in the statute of 1919, there will need to be a prior Act of Parliament to enable it to do that.
As it would be absurd to pass a prior Act of Parliament to enable the Ecclesiastical Committee to proceed in the manner that my right hon. Friend suggests, I am afraid that the solution that he now proposes is inappropriate and impossible to achieve. Will my right hon. Friend and his advisers seriously consider the impossible roadblock that that will create?

Mr. Alison: I take note what my hon. Friend has said. He has sat on the Ecclesiastical Committee for as long as I have and as frequently as I have, and he knows the extraordinary flexibility that it can deploy when it wants to discuss an issue. We witnessed some of those unusual, original and surprising forms of consideration when we considered the Measure regarding the ordination of women.
I am not attempting to lay down or to expose or propose anything final and definitive. The hon. Member for Birkenhead—he strikes a sympathetic note with me in this—wants Parliament to have the powers that it has in considering a Bill, to be able to make amendments and consider the matter in its full analytical role, as is usual for us here. That would be extremely difficult for the Church of England to think of—an irresistible force and an immovable object.
If it is possible to find a compromise that will enable the House of Commons to have some say in the details of a legislative proposal before it is finally crystallised, it might be, in some informal way, along the lines that I have suggested. If that proves to be impossible, I suspect that we shall not be able to have a Bill and that it will


have to be a Measure. However, I would like to discover whether it is possible to find some way in which the circle might be squared, or vice versa.

Mr. Simon Hughes: rose—

Mr. Jenkin: rose—

Mr. Alison: I must proceed; my hon. Friend the Member for Colchester, North (Mr. Jenkin) may be able to make his argument in a speech.
The hon. Member for Birkenhead referred to subsidiary companies. For the sake of brevity, I shall, with the hon. Gentleman's permission, skip the passage that I was going to offer the House about subsidiary companies, because he has received a rather more definitive answer in a letter than I can offer in a short paragraph this afternoon. He is at liberty to pursue the matter further if he wishes.
The hon. Gentleman was quite emphatic about the Ashford great park project. There is no evidence to suggest that we need a new, full-blown and inevitably expensive inquiry into the project along the lines that the Select Committee report recommends. However, we are anxious to be responsive and helpful to the Committee in that respect. Therefore, the Archbishop of Canterbury has agreed that the new Audit Committee, with additional independent and external expert assistance, is an appropriate body to carry out an independent investigation that will be set in train forthwith. The Archbishop of Canterbury will take a strong personal interest in the matter. I hope that the hon. Gentleman feels that that is a positive and constructive response to the anxieties that he and his colleagues have expressed in the report.
Many of the issues raised by the Committee are very much at the heart of the work of the so-called Turnbull commission which is reviewing the Church's central structures under the chairmanship of Michael Turnbull, the Bishop of Durham. The Select Committee report contains a particularly felicitous and intriguing historical passage. There are some real nuggets in paragraphs 9 and 10—I suspect the direct imprimatur of the hon. Member for Birkenhead.
Thomas Arnold said that no human hand could save the Church of England, and that phrase rings out quite early in the report. Echoing Thomas Arnold's gloomy prophecy, the hon. Gentleman may also have been tempted to think that no human hand, not even the Turnbull commission, could save the Church of England. As part of its functions, the commission will consider the Select Committee's various recommendations in the next few months. If no known human hands can save the Church, I think that we may find that we are getting close to salvation in the shape of the hero of the day, the hon. Member for Birkenhead, and his team from the Social Security Select Committee. Those human hands have done a lot of valuable work in this area; the Committee has made some constructive suggestions, which the Turnbull commission is taking into account.
We hope that Thomas Arnold's gloomy prophecy will be laid to rest by the new body that will emerge in the spring. We hope that new growth and new prospects will arise from the hon. Gentleman's studies and criticisms and from the Turnbull commission—our new deployment of heroes. The prospects are very good. I reiterate the commissioners' thanks to the hon. Gentleman and his colleagues in the Select Committee for their work in producing the report.

The Parliamentary Under-Secretary of State for the Home Department (Mr. Nicholas Baker): I would like to pay my tribute to the work of the Social Security Select Committee, whose report we are debating today. I have listened with interest to the arguments put forward by the Committee Chairman, the hon. Member for Birkenhead (Mr. Field), and the comments of my right hon. Friend the Member for Selby (Mr. Alison).
It may be helpful if I intervene at this stage to explain the Government's position. I shall comment briefly on some of the points in the report rather than try to provide an answer to the matters raised in the report or in the debate—that is not my function today.
The Coopers and Lybrand report and the report of the Lambeth group, together known as the Lambeth report, have allowed the Church of England to examine in depth the performance of the Church Commissioners and to consider the way forward. The Lambeth report made several specific criticisms of the management of the Church Commissioners' assets, and went on to address a number of long-term financial questions, including the mounting cost of clergy pensions. The report contained recommendations designed to prevent any recurrence of the events and my right hon. Friend has told us how the Church of England is now acting on those recommendations and I believe that the House will be impressed by its spirited and speedy action.
The review conducted by the Turnbull commission included an examination of the relationships between the executive functions of the General Synod, the Church Commissioners, the Church of England pensions board and the staff of the Archbishops of Canterbury and of York. The commission is due to report later this year.
The Social Security Committee report looks ahead to what may emerge from the Turnbull commission. It argues strongly for greater parliamentary intervention in the process by which the Church of England chooses to organise itself to face the future and urges that the legislative mechanism used to give effect to any proposed changes should take the form of a public Bill. I shall briefly address that issue.
Since 1919, when the Church of England Assembly (Powers) Act was passed, Parliament has delegated to the Church of England—first to the Church Assembly and now to the General Synod—considerable powers of initiative over its own affairs. Ultimate control, however, has always remained with Parliament which can debate Synod Measures and accept or reject them.
All Synod Measures are scrutinised in detail at several stages within the Synod and there is opportunity for debate and revision, just as there is in this House and in another place. It seems entirely right that the way forward for the Church of England should be led by the community of that Church. Of course, Parliament continues to play an important role in scrutinising each Measure—for example, ensuring that there is nothing in it that adversely affects the interests of the nation in any wider sense—and, in exercising its final dispensing power, may accept the measure or reject it.
One of the reasons why the 1919 Act was passed was that the vast increase in parliamentary business in the 19th century meant that very little time was available for ecclesiastical legislation. Time and again, ecclesiastical


business failed to proceed. It is evident that the position is, in principle, no different today. Indeed, we all know that the pressure on parliamentary time is even greater.
I am afraid that I cannot accept the arguments advanced by the hon. Member for Birkenhead because of the House's limited time and capacity to deal with the details of Church Measures. I draw comfort—as I hope the hon. Gentleman will—from the clear endeavours to which my right hon. Friend the Member for Selby referred to find ways in which there may be greater input, even if there may be difficulties with his suggestion.
It is also an established convention nowadays that the Government should remain neutral on all Church matters. We do not yet know what the findings of the Turnbull commission will be. If, when the commission has reported and its findings have been considered, the Church of England decides that it wishes to proceed by means of a Measure, I cannot foresee any grounds that would be likely to impel the Government to object.
Another point raised by the Select Committee Chairman was that the Government should satisfy themselves on the exempt status of each of the other charities that maintain their status in the legislation that follows the Government's White Paper "Charities—A Framework for the Future".

Mr. Jenkin: There is some difficulty with my hon. Friend's earlier point that there is an established convention that the Government should remain impartial in these matters, as several Ministers are also Church Commissioners. The system of accountability among Church Commissioners has broken down, and to that extent they have, as a body, rather forfeited Parliament's trust. That was not just the argument of the hon. Member for Birkenhead; the proposal was also adopted unanimously by members of the Social Security Select Committee. I urge my hon. Friend to consider the matter more carefully.

Mr. Baker: I take my hon. Friend's point seriously. The constitution of the commission not only was considered by the Select Committee but is an aspect on which we may hear more from the Turnbull commission. I imagine that the commission will want to address my hon. Friend's point, and we will have to examine it as well—for the reasons that he gave.
The Government do not accept that what has happened to the Church Commissioners gives grounds for instigating a review of the status of all exempted charities—those listed in schedule 2 to the Charities Act 1993. They include many universities, grant-maintained schools and certain museums and galleries. It is evident that the Church of England has recognised that mistakes were made in the past and that it is working to develop systems and structures that will prevent them from being repeated.
The Church Commissioners may give advice to exempt charities if it is sought. I understand that they are most willing to discuss with any exempt charities ways in which links providing access to that advice can be strengthened to the benefit of exempt charities. That is certainly a welcome offer.
The issue of pensions is certainly important and one on which the Lambeth report and the Select Committee made recommendations. My right hon. Friend the Member for

Selby described action by the commissioners, with which I am sure we are all impressed. Any new scheme for Church of England and clergy pensions will have to comply with pensions legislation, including the requirements of the Pensions Bill now before Parliament. One aim of that Bill is to establish a clear framework of statutory obligations for employers, trustees, scheme professionals and others associated with pensions schemes.
It is clear that the Church of England is facing a formidable challenge as it seeks to address complex financial and organisational issues. The Government wish the Archbishop of Canterbury and his colleagues well as they begin to identify solutions that will permit the Church of England to learn from the mistakes of the past and to tackle the issues that it faces. The Select Committee report makes an important contribution to that process.

Mr. Alun Michael: I pay tribute to my hon. Friend the Member for Birkenhead (Mr. Field) and to the members of his Committee, who have done a great service to the long-term interests of the Church of England and the House. The report was undertaken with two clear objectives. One was to find out what went wrong and what lessons could be drawn for the future operation of pension funds. The other was to establish how Parliament could ensure that structures imposed by law on the Church of England are efficient and appropriate to contemporary conditions. In exploring the second area, the Committee has given us much food for thought in respect of the operation and accountability of exempt charities—an aspect that the Minister rather dismissed.
My hon. Friend looked for heroes in describing what is in many ways a sad and sorry tale. I join his tribute to the Archbishop of Canterbury and welcome the many positive responses made to some events. The Committee concentrated on ensuring that the events in question will never be repeated and on protecting the interests of the clergy and the public, which must be right.
The right hon. Member for Selby (Mr. Alison), responding on behalf of the Church Commission, rightly acknowledged the report's importance as a source document. He referred to it as an encyclopaedia. He acknowledged also the accountability of the Church Commissioners to Parliament as well as to the Church. The right hon. Gentleman put on record the Church Commission's current position and the responses made to a variety of events. That was welcome, as were the right hon. Gentleman's assurances on a number of points.
The right hon. Member for Selby suggested that figures and statistics are elusive and difficult to pin down, but that is no excuse for not trying, and why it is important to deal with figures professionally and with integrity. The right hon. Gentleman's description of the historic sources of the Church's finance is not a ground for seeking to diminish public interest in the events that occurred.
The right hon. Member for Selby was right to stress the importance of having the right people in place who will operate with integrity. On a recent visit to the Clerk


office I saw on the notice board a quotation from Gibbon's "The History of the Decline and Fall of the Roman Empire":
The operation of the wisest laws is imperfect and precarious. They seldom inspire virtue, they cannot always restrain vice, their power is insufficient to prohibit all that they condemn, nor can they always punish the actions that they prohibit.
Nevertheless, the House has a responsibility to try to form laws which prevent the triumph of evil and encourage virtue. That is what structures for accountability are all about.
My hon. Friend the Member for Birkenhead outlined points of detail from the report which must be dealt with, but I will concentrate on issues of wider public interest and the Government's duties in responding to them. I was disappointed by the Minister's response, which was lightweight and dismissive of Government responsibility. Is that really the Government's considered response to a catastrophe—as it has been described—threatening not only the Church of England's parish work but the health of communities in which the Church works throughout the country? The Minister missed the public interest issue which led the Home Office to despatch a Minister to the Chamber to answer the report.
The Minister responded as though this were just ecclesiastical business, but public interest goes beyond merely ecclesiastical issues. This is not a party political issue in any sense, but the Opposition have a right to demand evidence that Ministers have understood their responsibilities, considered the evidence and findings of the Select Committee, and identified actions which the Government must take to resolve the matter. The Minister's response was lacking in each of those areas.
The House may consider that I approach the subject with the right balance of concern and objectivity, having been born and nurtured in the Welsh Presbyterian Church and being a regular communicant of the Church in Wales. I therefore observe the situation in England as an Anglican, but from the healthy perspective of disestablishment.
As a youth and community worker in my own city of Cardiff and in my constituency, I have seen at first hand—as in other parts of the country—the work of the Church and the leadership offered by fine priests in deprived areas, in which the priest and the minister are sometimes the last professionals to live in the communities they serve. At its best, and with the best leadership, the Church is often a beacon of hope in communities worst hit by economic and social decay.
I do not say that the Church and its leaders have been perfect. Neither do I limit my remarks to the Anglican Church. Members of the clergy in the United Reformed Church, Methodist Church and Roman Catholic Church also stand out in my experience—not least when they work together ecumenically, yn cytyn, across boundaries of Church organisation. My experience confirms the Select Committee's point that the loss of clergy from inner cities and housing estates would he a tragic impoverishment of communities already buffeted by poverty and despair. That is not to discount the spiritual gifts that the Churches bring to their work, but public interest issues should be of great concern to the House.
Today's debate is an occasion not just for looking inward at the interests of the churchgoing community but

for considering the wider public interest. The Government have a clear responsibility to ensure proper regulation of those responsible for charitable funds. As the Minister acknowledged, the Church Commission is an exempt charity. That concept is often confused in the public mind, and it may have become confused in the minds of some commissioners during the events which led to the tragedy.
The Church Commission is therefore exempt from the requirements to register as a charity and the Church Commissioners are not subject to regulation by the Charity Commission. Let us be absolutely clear that they are not exempt from all responsibilities under charity law, nor should their moral and legal responsibilities of duty and care be taken any more lightly than those which apply to the trustees of charities that are registered and regulated.
It is clear that the culture of our times has led to a lowering of standards and the suspicion that the Church Commission is not the only exempt charity to have fallen below the highest standards. I do not accept the Minister's view that there is no need to look again at the way in which the law operates in respect of other exempt charities as issues arising from the events involving the Church Commission read across into concern about how charity law applies to exempt charities in general.
We may debate on another occasion whether the system of registration and regulation is satisfactory. I feel that in some cases the Government interfere when they should keep their nose out, while in others they fail to ensure a proper degree of public accountability. That was well illustrated in the debate in Committee on 29 March on the Charities (Trustee Investments Act 1961) Order, but it is not the point today.
The Church Commissioners are subject to charity law and all the legal and moral responsibilities which apply to trustees. The Minister said that there is nothing to stop them making use of the expertise of the Charity Commission, particularly in respect of trusteeship and investment policy. To be sure of my ground, I spoke to the Chief Charity Commissioner yesterday. He felt that it would be not be right for him to discuss any specific charitable bodies, but he confirmed that many exempt charities make use of the services of the Charity Commission and maintain a close working relationship with his office. The Charity Commission's guidance and advice and publications are also readily available.
It is right that the Chief Charity Commissioner, Mr. Richard Fries, should observe the courtesies of confidentiality while confirming the general picture, but the Minister has a more specific role. In preparing for today's debate I expected him to have investigated with the Church Commissioners how they carried out their functions and the relationship that they enjoy with the Charity Commission, as the body established by Parliament and the instrument of Government in regulating charities.
I am more than willing to give way to the Minister if he wishes to respond to that or other issues that I have raised. I expected him to cover such issues in his own speech, but I am happy to let him remedy that fault in an intervention.

Mr. Nicholas Baker: Is the hon. Gentleman suggesting that the category of exempt charities should be withdrawn or abolished?

Mr. Michael: No. I am suggesting that the category of exempt charity needs to be considered in the light of what happened in respect of that particular exempt charity and the findings of the Select Committee report.
The Minister has not responded to the Select Committee report, which raises important issues. Nor does he appear to have discovered the relationship between the Church Commissioners and the Charity Commission. He made no comment about that, except to refer to the potential for a relationship between an exempt charity and the Charity Commission.
Is it the business of Parliament? Yes, it certainly is. As Parliament grants the Church Commissioners freedom of operation and the protection of their charitable status, they are accountable to Parliament, which has an important role in scrutinising the way in which they discharge their duties. The Select Committee report needs the most careful study and a detailed response because it is the instrument by which the House is enabled to carry out its obligations. If the Select Committee had not undertaken an investigation, we would not be debating the issues and there would have been no accountability in matters of great public interest. The Government also owe us a specific explanation, as it is an issue on which Home Office Ministers have pontificated in the past. Proper regulation of the Church Commissioners was a subject for concern before the Government's last major foray into legislation on charitable law.
I shall not repeat the comments of the hon. Member for Birkenhead, the Chairman of the Select Committee, but the House must accept that the debate has massive implications. The Daily Telegraph described it as a metaphor for our times. Perhaps it would be more appropriate to refer to it as a parable for our times. It was clearly a matter of careful and considered judgment which led the Select Committee to attribute £800 million Church losses to "unbelievable naivety" and to describe past speculation by the Church Commission as "foolish and reckless". The Government are accountable to the House for their failure to put protections in place for the Church, the clergy and the public.
In the 1989 White Paper, "Charities—A Framework for the Future", the then Home Secretary referred specifically to the Church Commission, saying:
Their constitution and arrangements, approved in the past by Parliament, already contain satisfactory measures for ensuring that the objects of the trust are carried out and that their property is safeguarded, rendering Charity Commission involvement superfluous.
The Minister has, in effect, admitted that the then Home Secretary got it wrong and that the analysis was a poor excuse for exemption from the Charities Act.
Given that Ministers failed to protect the public in that regard, will the Minister give a firm undertaking that there will be a review of all other charities which have exempt

status and that consideration will be given to whether the requirements of that status need to be changed. Is there not the strongest possible case for ensuring that the writ of the Charity Commission should operate in respect of exempt charities, at least in requiring evidence that accountability and standards are being maintained?
The Minister also owes the House an explanation of the double standards with which the Government appear to approach trusteeship and charitable involvement. The Minister will remember our debate in Committee on 29 March, when he failed to explain why the Government insist on maintaining the limit of a 75:25 split between broad-range and narrow-range investment for those charities that fall under the relevant provisions of the Trustee Investments Act 1961.
The Charity Commission considers an 85:15 split more appropriate for those charities which change their constitution and regulations. Where charities are free of those restrictions, the pattern dictated by prudence, as the duty of care still exists, generally leads to a 90:10 split. It has been estimated that the earlier 50:50 split was losing £450 million a year to charities and money continues to be lost to charitable causes by that regulation. Yet the Government maintain their tight regulatory stance despite the advice of their own deregulation task force that the requirement
interferes unwarrantedly in trustees' exercise of their discretion, and prevents them from maintaining the real value of their assets and investment income".
The point of referring back to that debate is that it illustrates the muddle at the heart of Government thinking. In the case of the Church Commissioners, where massive investments have enormous importance for communities in every part of England and involve wider public interest, the Home Secretary in 1989 was guilty of massive complacency. In the case of some of the smaller trusts whose functions are important but touch more lightly on the general public interest, the Home Secretary hangs on to his right to meddle and interfere.
The House has a right to demand an explanation of Government thinking and for Ministers to account for their stewardship. If the Minister cannot explain Government thinking, it will become all the more urgent to debate wider issues in the near future. Where is the coherence of thinking in the Government? That question demands an answer.
Does the Minister accept the need to look again at the position of exempt charities? Yesterday in another place, his colleague Lady Blatch acknowledged the considerable powers given to the Charity Commissioners in sections 8, 9 and 11 of the Charities Act 1993. Those powers enable the Charity Commission to undertake inquiries, require information and use sanctions in regard to a charity or charities and to suspend trustees and even to appoint a receiver. The problem is that the key paragraph of section 8 contains the words:
but no such inquiry shall extend to any exempt charity.
In view of the experience with the Church Commission, does the Minister now accept that the situation needs to change?
As exempt charities—I am deliberately referring to the class of which the Church Commission is a member—receive their status, their mandate and a significant element of their income as a result of decisions by the House, is there not a need for public accountability, including the publication of information and accounts and


a power for the Charity Commission to undertake inquiries in certain circumstances? There is a need for large, rich charities to act properly and to be subject to appropriate regulation. But will the Minister also concede that it is invariably the poorest groups and communities who suffer most when charities are improperly regulated or overseen? Surely the Government have a vested interest in the health and sensible regulation of the voluntary sector, particularly in relation to its financial management, so as to avoid pressure to pick up the tab for any failings.
The Minister referred to the effect of the Pensions Bill [Lords], but I would say that the relationship between Government and charities in this context is not especially clear—surely it, too, needs reviewing?

Mr. Malcolm Wicks: How do I explain to my constituents the fact that charities such as Barnardo's and Age Concern, which have good reputations for helping the needy, are quite properly regulated by the Charity Commission and have to publish financial accounts, while so-called charities such as Eton and Winchester, which serve the privileged, are secret societies which do not have to account to the Charity Commissioners or publish their financial accounts?

Mr. Michael: My advice is that my hon. Friend would have great difficulty in explaining that with any conviction. It is also clear that there is a major difference between some exempt charities, such as the Church Commission, and a number of bodies such as those that my hon. Friend mentioned. They, too, are related to the churches and have their roots in the Christian community. There are certainly some serious anomalies.
I am the first to accept that one needs to be very careful about changing charity law in a way that may have unforeseen consequences. I simply say that in 1989 the Home Secretary claimed that there was no need to consider the position of the Church Commission as an exempt charity. It is clear that that was massively complacent and wrong, and that there is a need to review the situation now. I regret that the Minister does not seem willing to agree to instigate such a review.
Coming next to the position of retired clergy and the pensions of clergy who are still in office, I had hoped to hear that the Minister had gone into the matter in some detail and was able to give us a considerable amount of information about it. The remarks of the right hon. Member for Selby in this context were to some extent helpful, but I am not clear about the Government's response to the proposals emanating from the Church Commission. I am not sure whether the Government are satisfied that all concerned will be fully protected and well served by the new arrangements. There is considerable anxiety among the clergy and their parishioners about the situation described in the Select Committee report.
The Minister should also be aware of concerns for the welfare of the former wives of divorced clergy. I do not know whether that matter has received any attention, but I know that some hon. Members have been approached about it. No doubt the Minister and the right hon. Member for Selby are aware of the organisation Broken Rights, which is campaigning on behalf of the women concerned following the break-up of their marriages. I believe that my hon. Friend the Member for Birkenhead has given personal support to, and taken an interest in, the work of that group. What has the Minister done to satisfy himself

that the rights and interests of these women have been protected? Many of them gave up their own careers and employment-related rights to support clergymen in their work, and have been left at a considerable personal disadvantage after working for many years as additional, unpaid curates.
Several of my right hon. and hon. Friends have contacted me to express their concerns about issues that we are covering in this debate. I refer to my right hon. Friend the Member for Bishop Auckland (Mr. Foster) and my hon. Friends the Members for Wentworth (Mr. Hardy) and for Pendle (Mr. Prentice). They and others have been contacted by clergy with worries to express, and by members of the Church Commission—all of them anxious that this debate should look forward as well as looking closely at the lessons that need to be learnt from the past.
The Bishop of Bradford has acknowledged to colleagues in his area that the House could spend all its time on what he described as "justified but repetitious criticism", and on seeking scapegoats. If he reads Hansard he will find that our debate has not been like that—although it was a fair point to make.
The Select Committee has underlined the seriousness of some of the lapses that have occurred. Paragraph 114 of the report, for instance, states:
The growth of subsidiary companies and the choice of partners in such activities, which were designed to circumvent the restrictions placed on the Commissioners by their charitable status—a development which began in earnest under the late Sir Ronald Harris as First Estates Commissioner in the late 1970s—needs further investigation.
The right hon. Member for Selby said that there had been some examination of these issues following the Select Committee report, and I welcome that. I repeat that the public and this House have an interest in the fact that the way exempt charities operate generally needs to be re-examined in terms of the requirement for legislation. The Minister should undertake to look into this.
The investigation called for by the Select Committee should not be undertaken to find scapegoats; it should be done to learn from mistakes and to ensure that arrangements are put in place to prevent these disasters from ever being repeated. Assurances are not enough, in view of past complacency—but I shall not repeat what I have said about that.
The bishop made the point that a committee under his chairmanship has had the duty of bringing about the implementation of the recommendations of the Lambeth group. That important point was covered in more detail by the right hon. Member for Selby. Many recognise the need to establish a separate pension fund; indeed, the Select Committee report makes specific recommendations on that point. It was also acknowledged by the right hon. Member for Selby when discussing the agreement to establish a contributory fund. That is most welcome.
It is perhaps not unfair to remind the Minister that this leaves the police and fire services as the two great areas of difficulty with unfunded pension requirements, which in turn are creating enormous problems in the public service.
I am sure that the House will concur with the view that the pension fund so established should be independent of the commissioners. There is concern in some quarters to the effect that Parliament may set specifications which are too onerous when defining the assets required for such a fund, but the experience of recent years shows the dangers


inherent in failing to ring-fence pension funds and to ensure that they are adequate to meet all the claims that may be made on them. In view of the real dilemma facing the Church, it is important to face up to financial problems and not to cut corners when establishing the pension fund in a way which might cause pain in future. The right hon. Member for Selby sought to assure us on that point, and it is reassuring to know that it will be taken seriously.
Next, I come to the important point of difference between the views of the Select Committee and those of some leading figures in the Church Commission. The Select Committee notes at paragraph 115:
The Church has two options concerning the nature of the proposed legislation… It can attempt to legislate by Measure, or it can propose a Bill.
Views expressed on behalf of the diocese of Sheffield to Members representing the area, including my hon. Friend the Member for Wentworth, urged us to encourage the processes recommended by the Lambeth group and expressed concern that a statutory pension fund containing every known safeguard in the interests of retired clergy might prove less flexible and more expensive than the commission's current proposals. It is important to understand that fear. It is certainly reasonable to ask Parliament not to be unreasonable, but it is also right for Parliament to make sure that adequate safeguards are in place and that the details of the new scheme, including its independence and accountability, are sound.
My hon. Friend the Member for Birkenhead said that it was important not to cripple the Church Commissioners in their other work. I hope that similar observations from both sides of the House will act as some reassurance to the commissioners that there is no intention to be unreasonably onerous. But it is also important for them to realise that there is keen interest in these issues in this House, and that Members will need to be reassured on various points. That is why I concur with the Select Committee's view that change should be brought about by means of a Bill, not a Measure.

Mr. Nicholas Baker: Before the hon. Gentleman moves on, I remind him that he did not answer my question about exempt charities and their registration. It is clear from everything that he has said that he intends that that category of charity should be removed. I ask him to bear in mind that that approach will apply not only to the schools that have been mentioned but to the National Curriculum Council, the Curriculum Council for Wales, the School Examinations and Assessment Council, all universities, according to my understanding, further education councils and trustees of museums throughout the land. Enormous changes in bureaucratic requirements will be placed on them all. In the requirements that he envisages, the hon. Gentleman is suggesting that mistakes made by the commissioners, whose activities we are discussing, should lead to burdens being placed on great bodies which have not made similar mistakes.

Mr. Michael: That is without doubt the most foolish and incompetent intervention by a Minister that I have heard. It had nothing to do with the passage of my speech that I had reached and was clearly inspired by an adviser

from Conservative central office rather than by professional advice. It arose from a total and deliberate misinterpretation of every comment that I have made.

Mr. Jacques Arnold: Stupid.

Mr. Michael: I agree with the hon. Gentleman. It was a stupid intervention.
The Minister will not gain anything by deliberate misinterpretation. He must not seek to recount words that I have not said. I simply ask him to accept that events that have taken place, as chronicled in the Select Committee's report, reveal failings on the part of an exempt charity and should give Ministers cause for concern. They should give Ministers reason to reconsider the Home Secretary's remarks at the time of the White Paper, when it was claimed that everything was so perfect in the regulation of the commissioners and of exempt charities that there was no need for change.
The Minister has fabricated the purport of my speech. That is disgraceful. It is an example of the way in which he and others, including the Prime Minister, have sought to invent things that have not been said by Opposition Members. Having made their inventions, they have gone around the country misrepresenting us. The Minister made a disgraceful intervention. I trust that I have answered it satisfactorily.
I return to the serious point to which the Minister seems not to wish to respond. It has nothing to do with his intervention. It is an important issue which was properly engaged in by the right hon. Member for Selby—namely, whether the issues that we are debating should be dealt with through a Measure or a Bill.
The right hon. Member for Selby suggested that there should be a debate in the Church. He appeared to take the view that the introduction of a Bill would inhibit debate in the Church about the provisions to be contained in whatever legislative Measure needed to be passed. It is clear from our exchanges that there should be consideration within the Church before a Bill comes to the House and that consideration in this place of that Bill should not be inhibited by our procedures.
The problem—I do not believe that the right hon. Member for Selby took it on board—is that we are dealing with something which goes beyond an ecclesiastical issue to embrace wider public interest issues. That is why it should come before the House in a form which allows full debate, including amendments. It should not be confined to a debate of one and a half hours. It should not be knocked on the head, as it were, at that stage. There must be real consideration of the issues. A debate of one and a half hours would not allow for proper accountability. We should not be satisfied with such a procedure when the issues are so serious.

Mr. Jenkin: May we take it that the hon. Gentleman's remarks constitute an undertaking on the part of his party that in the event of an accident of history which leads to his party, by some curious happenstance, forming a majority in the House in future, it would give time for legislation of the sort that he has in mind? May we take it that such a House would provide time for such a Bill, and that the hon. Gentleman is giving an undertaking on behalf of his party?

Mr. Michael: I am trying to respond to the serious issues raised by the Select Committee and by the remarks


of the right hon. Member for Selby. I hope that the hon. Gentleman will not take it amiss if I take the Select Committee's report and the right hon. Gentleman's remarks rather more seriously than his own intervention. The right hon. Member for Selby has outlined the issues, including the question of what form of Measure should come before the House. It is—[Interruption.]
I said earlier, Mr. Deputy Speaker, that it would not be appropriate to respond to the issues before us by conducting a party political debate. It is regrettable that one or two Conservative Members seem to want to indulge in a bit of knockabout. The issues are serious. How do we—[Interruption.]

Mr. Deputy Speaker (Mr. Geoffrey Lofthouse): Order. It is time that we cooled it and got on with the debate.

Mr. Michael: I am grateful, Mr. Deputy Speaker.
The real issue is whether we should proceed through a Measure which allows us to have only a short debate. We would not be able to seek to make changes through the tabling of amendments. The alternative is a Bill.
The right hon. Member for Selby sought to find a way of proceeding by means of a Measure without running into the difficulties that private Bills often face. Given the seven years during which I was involved in the private Bill that provided for the Cardiff bay barrage scheme, I have come to understand some of the obstacles that can stand in the way of private legislation.
I appreciate that the right hon. Gentleman was tentative in his remarks. In effect, he would be asking the House through the Ecclesiastical Committee to pre-clear or pre-vet a piece of legislation before it came before the House to he debated for an hour and a half. I have some reservations about that. Accountability to the House and by the House would be severely limited. The right hon. Gentleman might need to suggest to his commissioner colleagues that such a course might not be acceptable to the House. That applies not only to the Government and the Opposition but to ordinary Members and the protection of their interests.
I am trying to respond to the wish of the right hon. Member for Selby that we should be creative rather than offering immediate solutions or giving undertakings. Indeed, I am not in a position to give undertakings. We should be creative, perhaps, in trying to find a way round the difficulties. It might be more appropriate to consider the ways in which we might deal with a private Bill and allow it to pass efficiently through the House by means of agreement on the necessary procedures. That might be the appropriate approach.
The right hon. Member for Selby has accepted that there is a problem. He recognises that there is a need to deal with legislation and at the same time to provide for accountability and full discussion. That might be a more creative approach. There have been suggestions in some quarters that a Bill should be brought forward by the Government, as a Government Bill or a hybrid Bill. That might be one way round the difficulty, but I suspect that it would raise more difficulties. It would certainly be appropriate for the Government to provide drafting assistance and other help to the commissioners in the introduction of a Bill given the public interest issues that are involved. It would be right for both sides of the House

to deal with it expeditiously. The independence that is inherent in terms of charitable status surely means that the Measure should be a private Bill.
As I have said, we are dealing with important issues that need careful consideration. It is helpful that the right hon. Member for Selby has spoken his mind and encouraged an atmosphere of full debate. I hope that Ministers will respond positively. I am certain that we, the Opposition, would be willing to listen to concerns and to respond in a helpful way to means of reaching the conclusion that we all desire.
It is clear from the history of the subject that parliamentary scrutiny is needed to provide confidence and security for the future. That cannot be achieved through a Measure that is not open to amendment, and will receive only cursory scrutiny. At some point, the Minister should tell us what discussion he has had with the Church Commissioners about that.
Many of the required changes highlighted in the report are complex. The idea of a new relationship between the Charity Commission and exempt charities needs careful thought, and might appropriately be considered, on an urgent basis, by the Select Committee on Home Affairs.
The Minister appears to want to subject suggestions that we should consider the position to various interpretations. As I said at the beginning of my speech, I believe in "hastening slowly" in relation to change as it affects charities: if change is undertaken without proper discussion and thought, we may unintentionally disturb arrangements that have come into being over many years, and harm good practice in seeking to root out bad. We must be very careful before initiating legislative change. None the less, examining the position and the evidence, and asking questions, is an important element of the process. That is all that I have suggested, and I am disappointed that the Minister did not respond positively.
If the Minister sought to suggest earlier that I was proposing any action that would lead to a change in the status of any organisation as an exempt charity, he would be propagating a lie. I am sure that he would not wish to mislead either the House or the public; I hope that that makes the position as clear as it can be.
In relation to the Church Commission, there is a need to pursue the streamlining of procedures, the improvement of public accountability and other issues that have been given close attention in the Church. The House has a responsibility to ensure that changes brought about in practice and statute are adequate to restore confidence for the future. It is clear, however, that the events described in the Select Committee report are extremely serious—indeed, potentially devastating—and should remove for ever the temptation for the Church Commissioners or the Home Secretary to be complacent. The complacency shown by the Home Secretary in 1989 was seriously misplaced, and demonstrated once again the House's responsibility to scrutinise the Executive.
I hope that the Minister will take that clear message away with him, and that we shall soon debate substantive changes in a new Bill that will deal with all the important issues that have been raised today. I also hope that, in due course, the Minister will respond positively to wider issues relating to exempt charities.

Mr. William Powell: The House owes a great debt to the hon. Member for Birkenhead (Mr. Field) and his Committee. I am delighted that we have a full opportunity to discuss the Committee's report this evening.
Time was when Parliament used to discuss matters relating to the Church of England rather more regularly and fully. It is often forgotten that when Lord Beaconsfield—Benjamin Disraeli—won his great general election victory in 1874, he had no legislative programme to hand for his first Queen's Speech; he did not come to office pledged to change all the existing laws, as modern Governments do. Because the parliamentary Session required some legislation to occupy hon. Members' time, he suggested to the Archbishop of Canterbury, Archbishop Tait—who was very concerned about matters relating to ritual and so forth—that it might be appropriate for the first Session to be taken up largely with ecclesiastical legislation.
Of course, there was chaos in the House for months. It was then decided that it would be very bad for the House to devote too much time to discussing legislation relating to the Church of England. Nevertheless, we should welcome a modest opportunity—extending beyond an hour and half—to reflect on what is a great scandal for the Church of England, and its consequences. The Church, too, owes a great debt to the hon. Member for Birkenhead and his Committee, not least for the moderate and considered way in which he introduced the debate.
The House also owes a debt to my right hon. Friend the Member for Selby (Mr. Alison). He has occupied his present office for some years, with the highest distinction but also with perfect parliamentary manners. It would be easy for someone occupying such a position to inflame the minds of a number of hon. Members, and for Church issues to spin out of control; my right hon. Friend's capacity—near-genius, indeed—to keep matters in perspective has been a marvellous parliamentary sight over the years. Although he will receive few plaudits in the House for his conduct, he deserves a considerable tribute. I am happy to tell him now how much I appreciate not only his speech this afternoon—which was very helpful in explaining what is now under way—but the general conduct of his office over a long period.
As I have said before, I am the son of a clergyman who was, for a time, a pensioner of the Church of England. I therefore have some personal knowledge of the way in which payment of both stipend and pension to the clergy has worked in practice. I am also vice-chairman of a body involving Members of both Houses, called "Church in Danger". Hon. Members who take an interest in such matters know that I am nothing if not a high Tory, and a high Tory always believes that the Church is in danger.
The great sermon preached before the Lord Mayor by Dr. Henry Sacheverell established the phrase "Church in danger". He so enraged the weak Government of the day that they decided to impeach him. A great impeachment trial took place in Westminster Hall, and the London crowds were much exercised by the good divine's sermon. In due course he was convicted, and his sentence was that the sermon should be burnt. Accordingly, the hangman—

on Tower hill, I believe—burnt the good doctor's sermon. Of course, it subsequently became the best-selling sermon of all time, as it richly deserved to: those who preach that the Church is in danger not only tug at the consciences of high Tories such as me, but underline one of the most profound truths about the Church of England.
Only two or three years ago, a diocesan bishop told me that the Church today faced three great dangers. The first was the secularisation of society; we would all agree with that. The second was the danger of schism, which was sharply focused at the time by the ordination of women. The most profound danger, however, lay in the financial consequences of the scandal that the Select Committee has brought to the House's attention so effectively—although I see some truth in the claim that the Committee merely brought all the evidence together, and highlighted it for the benefit of a wider public audience than readers of the ecclesiastical newspapers and press releases. But it is certainly the case that the generous tribute which has been paid to the Lord Archbishop of Canterbury for the speed with which he acted when the scandal first came out was entirely appropriate.
There are those who say, and one still sees it in the columns of certain newspapers, that the Church Commissioners should apologise for what has happened, so I was delighted earlier this week to see the Bishop of Chelmsford, who for a short time was in the Gallery, reiterate in The Times that he had indeed, on behalf of the Church Commissioners, made a handsome apology to the Synod on a number of occasions. There is absolutely no question but that the Church Commissioners generally have admitted, and admitted handsomely, that serious errors of judgment were made. It is on the consequences of those serious errors of judgment that I want to make a few remarks this evening.
I would say, in parentheses, that the Church Commissioner who was most responsible for the scandal, Sir Douglas Lovelock—we have, alas, heard too little from him about his own personal responsibility in this—was a distinguished public servant. But his undoubted distinction as a public servant came as a tax collector, not as an investor of public funds. I hope that those who are responsible for the selection of appropriate people to act as commissioners and trustees of Church funds look to those with relevant experience in the handling of these matters, not merely to whether they have had a distinguished public career which has been brought to a conclusion by the compulsory age of retirement for our civil servants.
One of the main issues that has arisen here this evening concerns the question whether there should be legislation to deal with the consequences or whether, as my right hon. Friend the Member for Selby said, speaking on behalf of the Church Commissioners and, I think, on behalf of the Church of England at this stage, it should be by way of Measure.
I entirely support the remarks made by the hon. Members for Birkenhead (Mr. Field) and for Cardiff, South and Penarth (Mr. Michael). There are wider public issues in the reforms that must now be made than exclusively ecclesiastical ones, and the Church Commissioners and the Synod must understand that the legislation is bound to involve wider public issues than lie strictly speaking in their remit. Therefore, the agreement whereby Parliament would stay out of Church matters has to be read in the light of the fact that there will be Church


matters that legitimately and genuinely involve wider considerations. At that point, Parliament is the appropriate body to handle it, not the Church.
Secondly, the machinery by which any kind of consultation could exist for what my right hon. Friend the Member for Selby suggested is, alas, pitifully inadequate. The Ecclesiastical Committee is not a committee of Parliament. It is a statutory committee established by Act of Parliament, and it can carry out only those functions laid down in the 1919 statute. Most of us who serve on the Ecclesiastical Committee—a number of us are here present this evening—think that that statute is in need of urgent revision, and I would be the first to make that point.
I hope that my right hon. Friend, in talking to those with whom he is involved, will say that the time has now come for a committee to be established between Parliament and the Synod which would revise the functions that are carried out by the Ecclesiastical Committee. The only duty we have on the Ecclesiastical Committee is to decide whether legislation is expedient. In the best legislative tradition, the word "expedient" is simply not defined, and not one of us really has any sensible idea of what it might mean.
Leaving that aside, the Ecclesiastical Committee cannot amend and, if it recommends amendments, and those amendments are subsequently accepted by the Synod, the Synod has to begin the whole legislative process again because the Measure that it has sent to the Ecclesiastical Committee, and ultimately to Parliament, is incapable of amendment when it has completed its entire passage in the Synod. Therefore, the Ecclesiastical Committee can make only recommendations and, in due course, both Houses have to decide what they make of it, if they do so at all.
In order for the Ecclesiastical Committee to play a more meaningful role, it would be necessary to revise the legislation under which the Ecclesiastical Committee sits, and that would require a fresh Act of Parliament. It must be obvious to the House, as I outline these procedures, that that is not a way forward.
Therefore, I hope that my right hon. Friend will not only reflect on what has been said—I am sure that he will—but that he will be quite firm with those with whom he works in the Church Commissioners and in the Synod and say that they must really pull themselves together and recognise that this is a matter pre-eminently involving the Church today which must be dealt with properly by a Bill before Parliament because the issues themselves are wider than ecclesiastical issues. That surely is conclusive.
Having said that, I want to move on to some of the consequences of the scandal. Whatever the sum of money that has been forgone may be at the end of the day, there is no doubt whatever that there is a financial hole which is of considerable importance for the future. There are now more clergy pensioners than there are clergy. That is an entirely new situation, but it shows the financial burden which now has to be met in order to deal with pensioners. The truih of the matter is that that balance is likely to move more in favour of pensioners in the future.
We are already experiencing the consequences of that. I called upon the incumbent of one parish in my constituency the other day and he told me that, before he came to the parish, there was a four-and-a-half-year interregnum—four and a half years without a resident clergyman. There were, of course, plenty of retired clergy

prepared to conduct divine worship, but that is only part of a clergyman's duty. A clergyman's duty extends way beyond the duty to be in church on Sundays and to conduct divine worship. There is the pastoral work, work to be done in Church schools, and much else besides, and none of that was done because of the long interregnum. It is not surprising that the congregation fell apart.
Another parish in my constituency has a large population of rising 9,000. It may be that there are parishes in our big cities which have a larger nominal population than that, but in Northamptonshire that is a large parish. That parish has been without a clergyman since August last year and, as I understand it, there is no imminent prospect of one arriving. Of course, there are clergyman to conduct divine worship on Sundays, but in a parish of 9,000 the pastoral work needs to continue. The reason why there is no clergyman at the moment is that there is no money to pay him. The phasing through of appointments, lengthening those interregnums all the time, is one of the most serious consequences which is already being experienced.
There are those—my father was one of them—who thought that after world war two the most pressing problem that the Church faced was a re-endowment and that there should have been a major effort to boost the overall funds of the Church. A brilliant administrator such as Archbishop Fisher may have been the right person to carry out such a reform. Unfortunately, Archbishop Fisher allowed himself to be drawn into the cul de sac of canon law reform, and most of his time at Lambeth spent on administrative matters was taken up with matters that would now be regarded as being of comparatively little importance. It would have been a great help if the urgency of financial reform, which the projection of pensions had made plain would be a major charge on the Church, had been recognised. That opportunity was missed and today we face the consequences.
The Bishop of Durham is conducting a major inquiry into the Church's future needs. The bishop is not the person that most people think of as the Bishop of Durham but rather his successor Bishop Turnbull. The report of that inquiry is eagerly awaited, and I have no doubt that it will contain important provisions for the future.
I should like to make a plea on behalf of the rural parish which is an important part of the Church of England. My father was a rural clergyman all his life. Nowadays one village is being added to another, until up to six villages may be joined. That happens because of financial difficulties.
As the hon. Member for Cardiff, South and Penarth said, one of the glories of the Church of England has been the resident clergyman. But in far too many places the clergy are no longer resident: they frequently live 10 or more miles from their parishes. That is not healthy, and I hope to see it reversed, not least because so much of the strength of the Church was in the rural areas. I do not exclude the importance of urban areas, but the Church's strength in the countryside has been of the upmost importance in terms of the loyalty and affection of the people of England.
Not only are there many parishes with no resident clergymen but I have found, as may have other hon. Members, that the vicarage, in so far as it is used, is sometimes merely an office. Married female clergy tend to live with their husbands somewhere else. More than one parish in my constituency have active vicarages, but


they are merely offices, because the woman priests may live 16 to 20 miles away and come over for the day if that is appropriate. I am talking about weekday work and not about conducting divine worship on Sundays. The clergy are no longer the residents that they used to be.
Some savings can and must be made in Church finances. I shall start at the top. The Church of England has far too many bishops. Suffragan bishops were instigated to carry out confirmations, of which there were many in those days. Of course the diocesan bishop had other functions. I find the world of Parson Woodford and Trollope much more agreeable than many aspects of today's Church. It was the function of the diocesan bishop to attend the House of Lords and support the Government there. He had to make improving sermons before Parliament on occasions of national importance, such as our deliverance from the gunpowder plot. They conducted large confirmations. Archbishop Wake used to sit the whole day and confirm perhaps 10,000 people one after another.
In more modern times suffragan bishops did that and frequently combined that office with the office of archdeacon. The income came from the archdeaconry and not as a special income to the suffragan. Every diocesan bishop seems to think that he needs a suffragan. In the dear old diocese of Peterborough, of which I am obviously so fond, our last diocesan bishop had an assistant bishop. Our present bishop, splendid man that he is as we both know, Mr. Deputy Speaker, felt that he needed to be the last diocesan to get a suffragan. But he did not need one.
When I tell suffragans that they are unnecessary, they are very offended and say that their jobs now are to chair committees and visit clergymen in distress and so on. I have no doubt that there are more clergymen in distress than there used to be, but archdeacons and rural deans could visit them. Perhaps there are now more archdeacons and rural deans in distress. There is a plethora, an ever-expanding number, of committees, as we see in the Synod, which is producing more and more legislation.
A miscellaneous provisions measure came to the House a few days ago. It contained some tidying-up provisions to which nobody took any great exception and there seemed to be no great urgency about them. However, one provision was unnecessary and undesirable. It was that the regius professor of ecclesiastical history at Oxford university should no longer be a clergyman. But the clergy need to have ecclesiastical historians among them, and there must be an incentive for Church historians to become ordained. If there is a regius professorship at Oxford, so much the better. It would be a great misfortune if the Bench of Bishops contained people who knew nothing about Church history or the history of the Church of England.
We expect bishops to have many admirable qualities. We expect them to be godly and saintly men, to say their prayers and mean them, to understand something of pastoral life, and be able to teach the scriptures. Those are important matters. I do not regard the management of money and the Church's finances as among the most important qualities that are needed by bishops. That is why the Church Commissioners must be reformed. This vast body of people all trying to get in on the act and all of them spawning committees here, there and everywhere

has become inappropriate to our age. Let us leave the management of money not to bishops and archdeacons, but to people who have experience in those areas and are able to carry out their functions, which must be tightly drawn in law, in a proper and appropriate way.
There are also too many dioceses in this country. Some of them are enormous and the strain upon the diocesan bishop may be sufficient to require him to have one suffragan. The bishopric of London has an enormous number of parishes and, alas, a great many problems. The diocese of Chelmsford is a huge burden on its diocesan bishop. My father was a canon of Chelmsford and at least two of the four bishops of Chelmsford I knew suffered broken health as a consequence of having a diocese which runs from Dagenham and East Ham all the way to the Suffolk border and contains a huge variety of circumstances.
Some dioceses have three counties, but the diocese of Portsmouth seems to be just the Isle of Wight and the city of Portsmouth and not much else. That is far too small in this age. We need to look hard to see whether the structure of the dioceses that we have inherited is appropriate for the age in which we live and whether substantial savings could be made from reorganisation. Some hon. Members have said that every reorganisation leads to increased costs. That factor will have to be considered.
The upkeep of our cathedrals, many of which are among the finest buildings in the world, is of considerable national interest, but I suspect that one or two of them need not be cathedrals at all. That is certainly the case with the cathedral church of Chelmsford. I am sorry to identify it as such—I see that my hon. Friend the Member for Chelmsford (Mr. Burns) is present—but it was the parish church of Chelmsford before the decision was taken to upgrade it into a cathedral, and it does look more like a distinguished parish church than one of the glories of European architecture and heritage.
The consequences of the scandal will be felt throughout the Church for decades to come; there is no escaping from that fact. The people in. the pews—the people who matter—are of course appalled by what they have discovered. Serious errors have been made. I have been delighted to learn from my right hon. Friend the Member for Selby about what has been and is being done to put matters right, but I urge him not only to reflect on what he has said tonight, but to do what he can, at his persuasive best, to convince his colleagues in the Church Commissioners and in the Synod to pay serious attention to this evening's discussions.
The only way to proceed which will command the confidence of the public generally and the Church of England public in particular is to introduce an Act of Parliament, however inconvenient that may be to people who would like to put the matter away in a little corner and not let too much light be thrown on what is going on.

Mr. Simon Hughes: During the speech of the hon. Member for Corby (Mr. Powell), I was beginning to think that I was a student attending a lecture about the management of the modern Church and its historical perspectives. As those of us who have been in the House and served on the Ecclesiastical Committee with the hon. Gentleman know, he speaks from great experience, knowledge and commitment.
It think that this is a unique occasion. I do not remember an occasion in the House when a whole day was set aside, from the end of questions and statements until the Adjournment debate, to discuss Church matters. Suddenly, we have been able to focus our attention on that. Even when we debated the ordination of women, we started later in the day and did not have so much time allocated.

Mr. Frank Field: We had one and a half hours.

Mr. Hughes: Indeed.
Normally, we discuss the matter only when a bit of Church or Ecclesiastical Committee business comes to this place for approval or disapproval and, conventionally, one and a half hours is allocated. For no other reason, therefore, we should pay tribute to the fact that the Select Committee on Social Security, chaired by the hon. Member for Birkenhead (Mr. Field), decided, I suspect at his suggestion originally, to consider this matter of wide general concern. That consideration happens to be within the context of the management of the Church of England, and principles that the House has been concerned about in relation to a range of issues have been applied.
The fact that the Committee has considered an aspect of the management of an important institution's finances, that the matter is considered here, and that we have time to debate it, is important. The debate is specifically about the management of the finances of the national Church, the Church of England, but it relates to many other parallel concerns and debates that we are having. It is timely because a debate is taking place in Committee on the management and provision of pensions in the context of Government pensions legislation. That Bill, which has been through the other place, deals with some of the same issues: whether providers of pensions provide adequately for their employees and how pension fund assets are managed.
Two recent examples have brought those matters into the open and into public debate. They are not parallel, but they have similarities. The first was in the private sector and relates to the way in which Maxwell employees, to put it directly, were ripped off by their employer and placed in huge difficulty. All hon. Members have received representations from their constituents who have found themselves in difficulty. As someone who represents many print workers, I had many such representations.
The second example involves pensioners of the Church of England, that is, the retired clergy. They found, not that their employers—members of the Church—had directly ripped them off, but that those to whom they entrusted the management of finances ripped them off. They did not do so directly; they did so through incompetent, poorly advised, mistaken, foolish investments. The debate centres on that.

Mr. Field: Does the hon. Gentleman recall that the same Select Committee recommended to the Government that the Goode committee should be established to recommend a Pensions Bill, and that, when the Government came to it, it was such a complicated matter that we now have one of the biggest Bills to be introduced in this Parliament? The Government are trying to debate the Bill openly, and are not getting it through in one and a half hours.

Mr. Hughes: I remember that. That is another tribute to the hon. Gentleman's Committee. That matter slightly

predates the present debate. I have considered the Pensions Bill. I had a briefing with my noble Friend Baroness Seear, who dealt with the matter in the other place the other day. That Bill is hugely important; such matters are complex but important.
One of the things that most affects people's sense of security throughout their lives is what the state of their pension will be and how secure that is. People have a great interest in knowing how their pension managers are doing. They are big players in the national corporate financial scene. Many of us have experience of the fact that many of the matters that concern our constituents are determined by the decisions of pension funds and trustees, who are now large players and investors.
I should like to make some brief, passing references to the speech of the hon. Member for Corby. He got into a fairly extended consideration of how the Church could reorganise its affairs. It caused me to think of two things. First, there is a danger in the Church, as in the rest of society, that we shall start thinking that administration is all, and that we shall require the people at the top of the professional tree in the Church to have the same skills as those required of the people at the top of the professional tree in other sectors of life, that is, managers, accountants and financiers. But those at the top in the Church may not have those skills. Secondly, one complaint that is made all the time is that the best-paid people in the health service are the administrators, financiers and accountants, not the health professionals. The same is true in the Church.
This is a much smaller matter but, as someone whose sister-in-law—the hon. Member for Corby may not like this—is an ordained priest in the diocese of Chelmsford, may I say that my brother had to follow her to her house, which is in the parish. He had to live where she is living, as it were, on the job. She does not live away from the place. It does not necessarily follow that women clergy or women priests will, by necessity, live further away; it depends on the family's choice. My sister-in-law lives in the middle of her community, which very much welcomes that.
I welcome the report and all its recommendations. I welcome the recommendation that the Church Commissioners should be a smaller, businesslike body. It is nonsense that the Church Commissioners are a huge body of people who, in many respects, are only nominal members. In his earlier intervention, the hon. Member for Colchester, North (Mr. Jenkin) asked questions that related to the fact that more than one hon. Member serves on that body. The Prime Minister is one of its members. All the diocesan bishops are members. It is complete management nonsense that that huge body of people should be responsible, in any serious sense, for the management of these finances. As the Select Committee recommends, the Church Commissioners should be a small body of people who can get on with that, and who see it as their particular contribution to the management of the Church.
Clearly, it is proper—I hope that this will be picked up in Bishop Turnbull's commission—that a pension fund should be established and that it should take in money and pay out Church pensions. There is a management proposal that there should be a single board dealing with paying in and paying out; that is sensible. The people who know what the revenue is should decide what the outgoings are; that is logical. The important point has been made—this


was touched on by the hon. Member for Corby—that this whole business is not only about learning the lessons for the future, but about restoring the confidence of the contributors—the people in the pews. They need to be confident that when they pay their money in, it will not be thrown away. There is no incentive for people to give generously if they do not have confidence in those who are managing their money.
There is also the question of how the matter should be addressed in terms of legislation. There is the debate about the procedures that take place in the Synod and here and about the interrelationship between the decision-making processes of the Church and the decision-making process of Parliament.
It is self-evident that the Church misuses, misspends or misinvests its inherited wealth at its peril. There are likely to be dire consequences in rural and in urban areas if the assets of the Church are wasted by bad investment. The Church has a lot of updating to do to get its investment policy right and to get the accountability of its investment policy and processes correct.
The Church Commission was set up so that there could be a pooling of resources by which the poor parts of the Church could be assisted by the affluent parts of the Church. In those days, the system was intended to benefit urban, inner-city missions because the wealth lay in the rural parishes or in the slightly less urban parishes. It will be a tragedy if the consequence of this lack of investment is that there are not only not enough funds with which to pay the pensions, but few funds to go to support the Church in other places. The Church needs to be very conscious of the calamitous results of such a significant waste of its money.
It is always difficult to know how best to invest. The hon. Member for Cirencester and Tewkesbury (Mr. Clifton-Brown) has made it clear that one needs people with appropriate skills to ensure that the best financial and investment decisions are made. The hon. Member for Corby made the similar point that one should appoint not only people from the list of the great and the good, but people who know exactly how to deal with the matters in question.
As everyone has admitted responsibility, it is not now appropriate to go over in large measure whose fault it was. The archbishop has accepted responsibility, technically quite properly, and has tried to ensure that the matter is dealt with fairly. I intervened in the speech of the right hon. Member for Selby (Mr. Alison) to make the point about openness. I believe that, when the Turnbull commission reports and when we look at the structure again, we shall realise that there needs to be a more efficient, small, compact managerial organisation dealing with those matters and one that is much more open and accountable to the body of the Church. Although secret decision-making and a secret investment policy may be fine for private financial deals and in competing against other people, the subscribers and beneficiaries must, in their own interests, be allowed to see what is going on and must be convinced that the Church is making proper decisions.
An issue lies underneath all this. The Church must face up to the fact that it is running out of historical assets with which to support not just its present ministry, but its retired clergy. The position is changing from having the

money available, with some to spare, to having insufficient money to meet all the pension bills. That is why the whole issue is being addressed. I welcome what the right hon. Member for Selby said about the fact that the Church has been working out the problem, and that it has just come to an initial formulation for the way in which it will raise the money for pensions in future. The state faces the same issue. The welfare state will not have enough available from historical, accumulated moneys to pay state pensions indefinitely. The move towards occupational pension schemes is entirely right because it is necessary and because that is the only way in which we shall raise the money. The Church must do the same.
The Church of England needs to face up to the conclusion that most of the rest of the Churches have faced up to. In the free Churches and, to a large extent, in the Roman Catholic Church, congregations pay their ministers. I do not make my next point in the belief that I am any better than anyone else. The old tradition of the Church was that one tithed to pay for a variety of things in the Church, thus furthering the ministry of the Church. The money raised from congregations—I am talking not about the widow with her mite, but about people with considerably more money—is minuscule. My diocese of Southwark has the best level of giving of any according to the most recent records, but still it is minuscule.
If people really want the Church's ministry to work, they must covenant and give, and they must give in proportion to their salaries and incomes. Many people who go to church have large salaries and incomes, but the Church does not, in many cases, see much of that money. The churches have to make a contribution towards the diocese; they begrudge it and they think that it is too big. I am never sure whether they boost their Easter electoral roll or reduce it to affect their levy.
If the Church here is to face up to its responsibilities, as much as the Church in the rest of the world has, it must raise the resources to pay for its clergy parish by parish and community by community. There will, of course, have to be cross-subsidy, and the rich places should take responsibility for paying for the Church in poorer places. None the less, there must be much more self-sufficiency in the Church, not least because the historical assets of the Church will not be sufficient to keep up with rising bills, including the rising pensions bill. The Church needs to face up to that fact soon; it is a real challenge, especially in times of financial difficulty.
There needs to be more democratic accountability of the management of the Church and of the Church financiers. We also need to address the question of parliamentary and state accountability. One can go one of two ways. One can say that it is entirely inappropriate for the state to have any responsibility and that the Church should be allowed to get on with its own affairs. At the moment, the Church puts things to us on a take-it-or-leave-it basis—the phrase used by the right hon. Member for Selby.
Alternatively—this was the burden of the case put forward by the hon. Member for Cardiff, South and Penarth (Mr. Michael)—one can say that there is no reason why the Church should be any less open to scrutiny than any other organisation. I take that view, and I take the view that we should be as willing and ready to scrutinise the interests of our constituents who are pensioners of the Church, as opposed to pensioners of


Robert Maxwell, as we are to scrutinise the interests of any other group in society. We must therefore have procedures for doing that.
Outside, it may seem that we are discussing semantics when we debate whether the Church should propose Measures that we take or leave and negotiate beforehand. The hon. Member for Corby was right to say that, even, with the flexibility that the Ecclesiastical Committee has shown in the past, it is inappropriate for us to debate a draft Measure. The conclusion is, therefore, that, if we have the power to scrutinise the structure of the Church Commissioners—whatever structure the Church decides to adopt—as we should scrutinise all other charities, whether exempt or not, we should use that power by means of primary legislation.
I support those who, like the Select Committee, argued that we should have Bills. The Church could have its debates and then send legislation to us. It is a matter of ensuring not only that we listen to what the Church says, but that the Church pays heed to what is regarded as good practice for every pension fund and for every citizen. The Turnbull commission should take that into account.
I guess that what will happen after the debate is that we shall await the outcome of the Turnbull commission. The two debates will coincide, as it were, in terms of looking at the structures of the Church. That is the right way forward.
Many of us hope that the Turnbull commission will be bold, not timid. In the commission's last weeks, as it nears drafting its final report, I hope that the new Bishop of Durham and his colleagues will address the need for the Church to be seen to be organised in a way that minimises bureaucracy, maximises democracy and accountability, but, above all, releases people to get on with the job of the Church. That is a mission not to the people in the pews—if they are in the pews, we are nine tenths of the way there—but to the people who are not in the pews at all and who ought to be much nearer to the Church than they are.
The history of the investments that prompted today's debate has not done the Church any good. I hope that the Church has learned the lesson of that mistake and put that sad saga behind it. Once it has done that, the Church needs to be much less defensive.
I was with two friends—one a Christian, one not—in Rochester cathedral on a Sunday afternoon. They pointed out to me a notice on a board in the cathedral that started by saying that Church of England attendance was not declining. That is hardly a bullish, confident start to a statement about the current state of the Church of England.
The Church must be much more confident about itself, much less defensive, and much more concerned to be the missionary Church that, in many parts of world, it still is, but that the good old Church of England often does not appear to be in Britain. That is why I favour the disestablishment of the Church; that would release us to be a more missionary Church and less careful about being defensive.
Irrespective of whether hon. Members agree with that, I hope that the Church learns its lesson, puts its house in order, modernises its structures and gets on with its real job. That is not to defend the institutional old Church, but to manage itself so that it can deliver the unchangeable and eternal new message, which is about reaching

individuals so that Christ can change their lives. That is the principal concern of the Church, and the sooner we can be sure that it is not spoiling that message by bad internal management and that it has its house in order, the better the Church will do.

Mr. Geoffrey Clifton-Brown: I take part in this debate with a sense of sadness. At a time when the congregations of the Church of England are at their historic low point and when some of us, at any rate, who are members of the Church of England, feel that the Church is not giving a sufficient moral and spiritual lead, to heap this financial crisis—as, inevitably, it is—on to that dilemma is a cruel double blow.
I must pay a great tribute to the Social Security Committee; I pay one, too, to its Chairman for the measured way that he introduced his excellent report without which, undoubtedly, we would not be debating this extremely serious issue.
I should like to start where my hon. Friend the Member for Corby (Mr. Powell), in a sense, left off. I hasten to add that I shall not speak at such great length. My remarks will be extremely brief. Let us think about the consequences of this financial crisis, as I should like to call it. A substantial sum—mention has already been made of over £700 million—will have to be set aside for a properly funded pension scheme. That will leave the general fund in the Church Commissioners' hands severely depleted for all their other activities.
Those other activities, of course, include the day-to-day stipends of existing clergy. They also include the upkeep of a considerable number of churches. Their upkeep has to be met by smaller and smaller congregations, which are therefore contributing less and less, not only to the upkeep of the churches but to the Church's giving to other worthy causes, in this country and throughout the world.
The inevitable consequence is that there will be less money to fund the stipends. of individual clergymen. That means that congregations will be asked to pay more and, because they are declining, the number of clergy will decline. As that declines, so will the number of congregations. It is an ever-decreasing circle that, somehow, we must find a way of breaking.
The consequence of the declining number of clergy will be that the number of parishes administered by each clergyman will grow. In my group of parishes in Gloucestershire, we have an extremely dedicated parson who looks after five parishes with four parish churches and manages to hold a service in each every Sunday. I do not know how he manages to drive between them in the time that he has available. He is extremely ably assisted by his lay reader wife. The consequence of that crisis will be that his and other tasks will become ever-more fraught. If he is being threatened with at least another three parishes to add to his existing ones, he will certainly not be able to hold a service in every church in every parish, every week. That will be an extremely sad day for the parishes involved.
Almost every mistake in the book was made in the financial management that we are discussing. Unfortunately, one or two of the chief executives are still in place, notably the chief executive of the pension side in the Church. The Select Committee report makes it clear


that it was he who did, to use the report's words, a back-of-an-envelope calculation of the change in pensions policy to give clergymen and the widows of clergymen a pension increase to two thirds of final salary. That gave rise, as my right hon. Friend the Member for Selby (Mr. Alison) has said, to a threefold increase in the cost of pension contributions between 1981 and 1991. Over that same period, the benefits of that pension scheme increased 17 per cent. above the retail price index. The intent is laudable but it is somewhat foolish if it cannot be afforded.

Mr. Jenkin: It is important to emphasise that the gentleman in question was not responsible for taking that decision. We spent some time in Committee questioning the source of that decision. What is most disturbing about what we discovered is that decisions of that magnitude simply emerged from a consensus, perhaps driven a bit by the Synod, perhaps driven a bit by some of the commissioners. Those momentous decisions became policy without anybody formulating a paper to consider all the consequences and going through a proper process of decision making. It is wrong to cast blame on individuals in the way that my hon. Friend's comment might be interpreted.

Mr. Clifton-Brown: I am grateful for that clarification. Nevertheless, the individual concerned has had professional financial training and is involved in a firm that gives pensions advice. He is therefore expected to know something about such matters.
The lesson that must be learnt from the whole debacle is that we need a proper accountable, open, democratic system. As I said to the hon. Member for Birkenhead (Mr. Field), part of what has gone wrong in the past is that too many of the sort of decisions that we are discussing have been made in secret by very few people. If the House is to remain the scrutiny body for Church affairs, we need a system whereby the House can obtain all the information necessary in order properly to scrutinise the decisions. That is what has gone wrong in the past.
I am not a Johnny-come-lately to the subject: I have been asking questions on Church affairs since I first entered the House in 1992. Up until then, I do not believe that the House had the necessary information to know what was going wrong. It was not until the 1991 report that we even knew about the disastrous investment in Kent.
I hope that lessons will be learned. We must have a proper, democratically accountable system and proper accounts. After all, the National Audit Office had been asking for properly consolidated accounts for six years prior to 1991 before it eventually got hold of them. Had those accounts been available, it is conceivable that some of the mistakes would have been spotted earlier.

Mr. Jenkin: That is certainly true.

Mr. Clifton-Brown: I thank my hon. Friend for that guidance, because he was a member of the Committee that produced the excellent 1991 report.
Undoubtedly, wrong decisions were made. We need a proper financial structure. I should like to see the results of the quarterly meetings at least summarised in the annual report. I should like to see proper accounts

showing the performance of each section of the Church Commissioners' fund. We owe it to past clergymen to make a decision as soon as possible to set up a proper actuarially funded pension scheme. There can be nothing more important than the obligation to assure retired members of the clergy that their pensions will be honoured in full. We owe it to them to make sure that we get a decision as soon as possible.
It is now two years since the Lambeth group identified the fact that pensions were not properly funded and pointed out that no fund was earmarked for pensions within the overall Church Commissioners' funds. I do not believe that the Church Commissioners even knew fully what the pension obligations were each year. We owe it to those clergy to set up an independent actuarially funded scheme for past pensions as well as to provide for the pension liabilities of present clergymen. That is where it may be prudent not to fund in full, because nobody knows what those liabilities will be. As the hon. Member for Birkenhead has already said, it may be prudent to set aside a fund with the obligation on Church Commissioners that if there is a shortfall in the fund, it can be made up at a later date. If that is not done, there may be overfunding now and the other obligations of the Church may suffer.
Lessons have to be learned. We need proper systems and proper professionals in place. My right hon. Friend the Member for Selby (Mr. Alison) has never said whether proper pensions management advice has been sought. I shall be pursuing that in questions. I am not talking about property advisers, to whom I have talked and who I know do an excellent job, and I am not talking about actuarial advice on how much money needs to be set aside. I am talking about pension fund management, which I mentioned in my intervention to my right hon. Friend the Member for Selby. We need to know how well each section of the fund is doing.
When I was involved in property fund management as a chartered surveyor, the portfolios of all our clients were measured against an index. We could tell any of our pension fund managers how their fund was doing compared to a basket of other funds. We could probably find a fund similar to that of the Church, where some 50 per cent. or so of its investment was in property and we would be able to say how well the Church fund was doing compared to that similar fund.
It is essential that, before long, we have a proper annual report with accounts from the Church Commissioners so that we can see how the fund is doing. As the hon. Member for Southwark and Bermondsey (Mr. Hughes) has said, it is essential that trust in the people who will manage the Church finances in the future is built up. That is vital if we are to encourage people to give more. I have no doubt that Bishop Turnbull's commission will be urging all of us who are members of the Church Commission to give more. If we are to give more, as our ancestors have done throughout history, we must not be suspicious about the way the funds will be managed. That is one of the most important things for the Church Commissioners to achieve. They must convince all of us in the Church who might be thinking of giving money that it will be properly managed.
I am delighted to have been able to take part in the debate. This is a difficult moment for the Church but, historically, all institutions have their ups and downs and I have no doubt that, given proper leadership and participation from its members—it has had that in the


past—the Church can again rebuild the moral and spiritual lead that the nation desperately needs. Our spiritual stock is going downhill. If we are to stem the increased rate of divorce and the break-up of families, we must have that proper spiritual and moral leadership. I look to our leaders in the Church to remedy all the things that I have mentioned.

Ms Kate Hoey: I welcome the report and its recommendations. I was a member of the Select Committee but I joined only in the latter part of the inquiry. I want to pay tribute to my hon. Friend the Member for Birkenhead (Mr. Field) for the way in which he chairs that Committee and for the way in which he handles it generally. In spite of the party political differences, the debates that take place in that Committee are conducted in a way that uses those differences in the best interests of all our constituents. My hon. Friend's speech was interesting and made clear the way forward following the report. Much of the excellent report is due to my hon. Friend's consistent and dedicated interest in this subject.
I agree with what has been said by my hon. Friend and other hon. Members who have mentioned opening up the processes in the Church and making it more accountable. There is a great deal of mystique around the Church of England and the Church Commissioners and that must be got rid of. If the report does anything to open up the debate within the congregations across England, it will be extremely useful.
The report refers to Parliament's somewhat laissez-faire attitude to the Church of England and to the way in which it deals with it in the House. If we are to have an established Church—there is a great deal of debate about that—it is important that Parliament takes its involvement more seriously. As my hon. Friend the Member for Cardiff, South and Penarth (Mr. Michael) said, there is a public interest and it must take into account the relevance and importance of the Church in England, particularly in the inner-city areas. Just as the numbers who attend some of our debates in Parliament do not reflect the importance of the work of Parliament, so the size of the congregations on Sundays does not reflect the importance of the work of the Church. It is important that we do not measure what the Church is doing by the number of people who go to churches on a Sunday.
It is necessary to have a Bill rather than a Measure, because we must have this important debate. I understand that my hon. Friend the Member for Cardiff, South and Penarth could not commit the next Labour Government to introducing a Bill and could not give a timetable. However, I am confident that we shall find a way to allow much greater debate than just one and a half hours on a Measure.
I should like to pay tribute to one of my constituents—the Archbishop of Canterbury—who acted in a way that showed clear leadership once the results of the inquiries by John Plender in the Financial Times were published in July 1992. Once that "loss" of £800 million on property speculation was revealed, the Archbishop of Canterbury acted promptly. I very much welcome, as the right hon. Member for Selby (Mr. Alison) did, the fact that independent auditors will be looking at the Ashford development. The Committee found it most disturbing

that the Church could even think of getting involved in such a development. It is crucial that independent auditing is introduced.
The subject has not been mentioned tonight, but the Church must consider the whole question of morality and ethics; whether the Church should be involved, and to what extent it should be involved, in property development, speculative developments and in developments which may be perfectly acceptable in other areas of life, but which may not be the ways that the average churchgoing member of the public thinks that the Church should invest. I hope that the archbishop will identify his role in that matter and offer some leadership. We should consider not only that matter when the Church makes a bad investment, but whether the ends generally justify the means.
When Sir Douglas Lovelock gave evidence to the Committee, he asked a question about the end justifying the means and whether the Church took anything to do with ethics into account. It was interesting that he said that the Commissioners were
there to support the parochial ministry of the Church of England and they should strain every nerve to do it, and that is what we were doing … in pursuit of that, we did things which subsequently have seemed to be imprudent".
It is not good enough to question afterwards reasons for involvement in investments which may not be ethical. The Church should draw up criteria after a debate among its congregation. I also believe that there was complacency about the losses, as some hon. Members have said. Other—albeit slightly different—pension funds did much better and were much more capable of dealing with the recession than the Church.
I want to comment on the consequence of that debacle and on what has happened in inner-city areas. In my own inner-city area of Lambeth, there are many churches, but each church does a great deal more than providing a service on a Sunday. One cannot underestimate the work done in areas of high deprivation, poverty and very bad housing, where there are high numbers of young, single mums, few play spaces for' children and all sorts of other problems that result from living in the inner city. The work done by the churches and the clergy in such areas is greatly appreciated. The appreciation may not always be shown by more people attending church, but, like many other things, if it were not there, it would be greatly missed.
Some churches in particular have to deal with homelessness. St. John's at Waterloo spends a great deal of time helping people who sleep right next to the church in the bullring. Indeed, every night the church steps are covered with people sleeping rough. St. John's is also involved in youth projects and works in a multiracial community. All those activities are vital in a poorer area where people are not able to contribute as much as they might in other areas, although of course some people contribute greatly.
I was interested to hear the right hon. Member for Selby talk about the transitional arrangements for poorer dioceses. It is absolutely crucial that areas such as the one that I represent are treated differently. Some hon. Members may have received a letter today from the Rev. Richard Thomas, the communications officer for the diocese of Oxford. It is interesting that the Church now has communications officers as well. Perhaps he is on e-mail. He pointed out that Oxford was one of the first


dioceses to call for an independent inquiry following the report on the commissioners' losses in the Financial Times, which is very welcome. He went on, however, to criticise part of the Select Committee report. He said that, since the diocese of Oxford finds 92.4 per cent. of its costs from its own resources, it rejects the view expressed in the Select Committee report that the parochial system is under threat in his diocese.
That sounds a little smug. The book "The Historic Resources of the Church of England" shows on a beautifully coloured map those areas of the country which pay more and have high income and high potential. It just happens that Oxford is in the area of highest income and highest potential, yet the inner-city areas to which I have referred are a very different colour; they have low income and low potential. It is not good enough for one diocese, which is especially well off, simply to ignore what happens in areas such as the inner city that I represent.

Mr. Frank Field: If some dioceses are doing so well, does my hon. Friend hope, as I do, that the commissioners would expect such dioceses to cover the whole of their future pension commitments much more quickly than the poorer dioceses which she and I represent?

Ms Hoey: I hope that that will be taken into account. It would not be possible for areas such as the one that I represent to meet their pension commitments in the same length of time as it would take the richer dioceses.
I hope that the right hon. Member for Selby will take seriously not only the views of the Select Committee, but those which have been expressed tonight. It is clear that the majority of hon. Members present feel that there needs to be further debate and more accountability. If the Church is to win back confidence after this debacle, it is important that the recommendations of the Select Committee report are considered.
Indeed, I hope that the Church returns to looking sincerely at what it said in the report "Faith in the Cities". That report gave people a lot of hope for the future of the Church. It is crucial that that is not lost and that we learn from our mistakes. The Select Committee report has a wide remit. Indeed, it would be a real eye-opener to the average member of a congregation, and it is very important that we learn its lessons.

Mr. Bernard Jenkin: I rise rather at the fag end of the debate; nevertheless, I hope that my speech will be worth while. I declare my interest as an adviser to Legal and General Group plc. It is of tangential interest to this debate, but I declare it as a formality, as it is a major provider of pensions.
The hon. Member for Vauxhall (Ms Hoey) referred to a letter that she had received from the Oxford diocese. I recently received a letter from my own diocese of Chelmsford, which was similar in tone. It described the report of the Select Committee on Social Security as
not news to those with responsibility for ministry in the Church of England",
and it explained how the consequences of the Church's decision were all in hand and that everything would be all right. There is no reference in that letter, for example, to the possible necessity of providing additional

contributions to pension funds. I do not think that the full impact of what has happened has been absorbed and I thoroughly endorse the comments of the hon. Lady.
This debate has been very much characterised by one tribute after another to the hon. Member for Birkenhead (Mr. Field). One is reminded of the second line of the hymn, if it is not idolatrous to quote from it, that says:
To his feet thy tribute bring".
I share those sentiments. Being involved with the report as a Member of the Committee was an interesting exercise and very worth while.
I want to cover three points, one of which has already been discussed quite extensively—avoiding complacency. Behind the tabloid headlines, of which one can understand Church Commissioners becoming a little tired, there is a genuinely horrific story. Perhaps we have understated some of it and, on re-reading the report, I wonder whether we have. I should like to put those features on the record, talk briefly about the apportionment of blame and, finally, about the role of Parliament.
I intervened on my right hon. Friend the Member for Selby (Mr. Alison) about the problem of the property portfolio in the context of what he referred to as the "loss" of the Church Commissioners. He quietly admonished the Committee for putting the word "loss" in inverted commas in paragraph 17. We often hear that £800 million has not really been lost. It is worth studying that paragraph and the pension funds with which the Church Commissioners' fund has been compared. Between 1989 and 1992, the Church Commissioners' funds peaked at £3 billion, but at the end of that period stood at just over £2.1 million. That loss is the source of the £800 million figure.
During that period, however, comparable pension funds increased by between 10 and 15 per cent. One could argue that the loss is far greater than £800 million, especially in terms of the on-going loss of income to the Church of England as a result of that lost money. Once losses have been sustained, one cannot get the money back. One starts with the number of talents in one's hand, that is the lesson. That income has been irrevocably lost to the Church, with the consequences that flow from it.
The hon. Member for Southwark and Bermondsey (Mr. Hughes) said that the secrecy surrounding the loss might be acceptable in a private business, but not in a business handling public funds. He has got it wrong, because a publicly quoted company, or indeed, any company is required to file a consolidated report and accounts at Companies House on a regular basis. That was not done by the Church Commissioners; moreover, even the information that was provided was thoroughly misleading and did not reveal the proper state of the Ashford project.

Mr. Clifton-Brown: On the financial management, does my hon. Friend agree that as the capital value of the fund decreased, it was inevitable that the income decreased? The commissioners moved to make up the shortfall by buying high-interest coupons, therefore exacerbating the future capital growth of the capital fund.

Mr. Jenkin: There is a great deal in what my hon. Friend says.
By any standards, the Metro centre would be a prime asset in any property portfolio. No one would dispute that. When the Select Committee took evidence, it was pointed out that the approved budget for the project was originally £130 million. Coopers and Lybrand gave the final cost at


£272 million, yet we were constantly rained upon with words to the effect that it was an extremely successful investment. The Chairman of the Select Committee finally pointed out:
You keep maintaining this is the most brilliant development, and I am now beginning to appreciate Sir John's skills.
Sir John was the original partner, who managed to sell his half of the development to the Church of England at the absolute top of the market. The Committee thought that, somehow, he had managed to dump the project on the Church of England, but, no, the Church had bought it voluntarily.
I used to work for 3i, which is based in the constituency of the hon. Member for Southwark and Bermondsey, and I was trained in the arts and technicalities of venture capital. We would not touch property projects, because that is a specialised market, and the development of retail property is an even more specialised market. The Church of England found itself in those specialised markets and went into partnership with the real sharp-toothed experts. It is no surprise that when deals were offered, the Church, given its inexpert experience and inexpert advice, offered a higher price for them than any other group. That is why the Church Commissioners were dumped with the Metro centre.
The commissioners have not denied that the returns to the Church of England's investors on the Metro centre was negative, but we were constantly told that it had been a fantastically successful investment. That demonstrates the scale of the amateurism with which such projects were approached by the Church Commissioners.
Special measures were taken to increase the income of the Church Commissioners. Capital was spent and capitalised in their accounts, but was then taken as revenue through subsidiary companies and distributed to the Church of England. Sir Michael Colman specifically said that that practice would be illegal in any ordinary company. That again demonstrates the lack of judgment that was used in making such decisions.
Should we allocate blame? I do not think that we should allocate it to specific individuals, because the commissioners arrived at the beginning of the 1980s without having engaged in any serious reform of their procedures for perhaps 100 years. Some minor reforms had been introduced, but their culture of behaviour was deeply rooted in the past. The way in which they arrived at decisions had not caught up with modern practice.
As I said earlier in an intervention, the decision to increase the pensions simply emerged. It is impossible to find anyone who took responsibility, because no one was responsible. The structure does not identify individuals who are responsible. That explains to a great extent why the bishops have been so apologetic. His Grace the Archbishop of Canterbury and the Bishop of Chelmsford have acted swiftly to ensure an adequate response to the crisis, but they have quite rightly not sought to find scapegoats because they feel that everyone is responsible. This House is also responsible because, ultimately, the affairs in question have been conducted through an institution that is responsible to the House and Parliament. We share in that responsibility. I say that even though I have only recently been elected to the House.
That brings me to my final point about the role of Parliament. We could continue to leave the Church Commissioners to sort out their own problems. We could

spend about one sixth of the time spent on today's debate nodding things through when they present us with a Measure. That would be profoundly wrong.

Mr. Michael: Hear, hear.

Mr. Jenkin: I am glad that the hon. Gentleman, the Opposition spokesman, agrees. I asked him earlier, in all sincerity, whether he would be willing to make a commitment on behalf of his party that time would be found for debates of this nature. I was a little disappointed when he failed to offer that commitment.

Mr. Michael: Since the hon. Gentleman has provoked me, let me respond in a friendly way. If he asked the same question of the Leader of the House about next week's business, he would not get a clear assurance. It is not for a Front-Bench spokesman to commit either the Government or the Opposition to find time for such a debate; that matter is dealt with through the usual channels. My reply, which was constructive, was that I am sure that the Opposition would be willing to respond constructively to the comments of the right hon. Member for Selby (Mr. Alison) about reaching the right balance to ensure not only the swift passage of a Measure but time for debate and amendment.

Mr. Jenkin: I believe that we all share that worry. I expect that the anxiety of my right hon. Friend the Member for Selby is that, being a private Bill, unable to take a guillotine, it would be subject to all the delays, as the hon. Member for Cardiff, South and Penarth (Mr. Michael) said, like the Cardiff Bay Barrage Bill. It might take years to pass through the House, and obviously we want a swifter process than that if possible. However, we must have a measure that we can properly scrutinise and amend. That requires the Government, of whatever party, to provide time and to ensure that there is a Bill that we can amend.
I sent a summary of the conclusions of the Select Committee's report to every one of the serving clergy in my constituency. Some of them wrote back and asked for a full copy of the report. Many of them wrote back with their comments. That has opened the door on the scale of the problem, of which I do not think many of them had previously been aware.
I quote one letter—in fact, from the constituency of my hon. Friend the Member for Colchester, South and Maldon (Mr. Whittingdale). The writer actually says:
I thoroughly approve of your plans, particularly legislation through proposing a Bill.
The House must respond to the many churchgoers and clergy in our constituencies, and shoulder its responsibilities, otherwise we simply go down the track advertised by the hon. Member for Southwark and Bermondsey. People will ask, "Why have an established Church at all? Why are the Prime Minister and other Ministers Church Commissioners if we simply put through Measures on the nod?"
I shall perhaps embarrass my hon. Friend the Minister. No doubt the Measure would be nodded through with an element of approval from the Government. The payroll vote might even be whipped to ensure a speedy process. That is not the way that the matter should be dealt with, and I very much hope that Front Benchers on both sides of the House will consider it important enough for the House to consider it properly.

Mr. Frank Field: With permission of the House, Mr. Deputy Speaker, I conclude by thanking hon. Members who have given up a Thursday evening when they need not have been here. It shows again the interest that the House takes in these matters.
I wish also to emphasise the three aspects that emerged most strongly for me from the debate. I hope that the Government will seriously consider the policy implications of the behaviour of one exempt charity. No one has asked for the whole elaborate structure to be brought down, but we all believed, when we passed the Charities Act 1985, that exempted charities were working rather well. My experience, having been in the House for 16 years, is that, whenever the House agrees on a measure and nods it through, whether it is the Charities Act or the Child Support Act 1991, one can almost guarantee that there will be trouble shortly afterwards. One of the reasons for having a ding-dong in this place is to try to probe matters carefully.
The other two issues are directed at the Second Church Estates Commissioner. I am sure that everyone will be pleased with the statement that he made today about the inquiry that the Church will undertake into the developments in Kent. None of us wants the Church to spend more money than necessary in considering those issues; enough has already been spent. We are not in the business of giving additional fees to solicitors, to other lawyers, or to specialists in that subject.
I hope that the most important message that the Second Church Estates Commissioner will take away is the feeling on both sides of the House about the way in which future legislation—in that respect only—should be approached. None of us wants to overturn the 1919 enabling Measure. Those of us who have spoken cannot, as a group, be classified as fanatics who have some hidden or other agenda that they wish to inflict on the Church.
It is obvious, from our debate, that there is genuine anxiety about the way in which one of the great institutions of the country will approach the next stage of its existence. When two Bills, or two Measures, do come to the House on the pension front and on restructuring the Church Commissioners, we should like to help the Church, in a humble manner, to get those measures as right as humans can get them right—not to put our sticky fingers into affairs that are not our affairs but merely to emphasise, as so many people have emphasised, that that is not just an ecclesiastical matter.
The Church of England is an institution that belongs to the nation and is, in some ways, inseparable from it, and the Church cannot maintain that position and claim a sect-like status when it comes to legislation.

Dr. Liam Fox: I beg to ask leave to withdraw the motion.
Motion, by leave, withdrawn.

Bingo

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Burns.]

Mr. John Whittingdale: I am grateful to have the opportunity to mention a matter that affects millions of people throughout the country.
I admit that a year ago I would not have guessed that I would be speaking in a debate about bingo, let alone initiating one. My interest in that subject arose only after I was invited, earlier this year, to visit the Gala bingo club in Colchester. The club is in fact in the constituency of my hon. Friend the Member for Colchester, North (Mr. Jenkin), whom I am pleased to see in his place tonight.
I had never been to a bingo club before, but I thought that it would be slightly fading and a bit dingy and that it might be attended by perhaps 50 of my more elderly female constituents. It had also been suggested to me that I might enjoy calling a game, so I had been practising beforehand with such phrases as "66—clickety-click" and, indulging in a fit of nostalgia, "Maggie's den—No. 10".
My first surprise was that bingo clubs of the 1990s have changed a great deal since the smoke-filled halls that were associated with the industry in the 1960s. The Gala club in Colchester is modern, spacious and comfortable, and in addition to bingo it offers a range of other entertainment, such as cabaret acts, a restaurant and bars. It is typical of the new breed of bingo clubs, costing as much as £4 million each, which employ more than 35,000 people throughout the country.
My second surprise of the night was the number of people who were present. Instead of 50, I found close on 1,000 people in that club, both male and female, of all different ages and of many different social backgrounds. A bingo club now is not only a gambling hall; it is a leisure centre where people can meet, talk, enjoy a drink, have a meal and generally have a fun and sociable afternoon or evening of activity.
In addition, clubs often fulfil a more general social role as places where elderly people can go during the day to enjoy a cheap meal, have a bit of fun and chat with friends in a warm, safe environment. It is for those reasons, perhaps, that more than 3 million people regularly play bingo in this country.
The stakes are comparatively small; they often work out at less than 30p a go, and as much as 90 per cent. of that sum can be returned in the form of prizes. It is gambling in its softest form. Unlike casinos, horse racing and the dogs, one cannot lose one's life savings, however hard one tries, by playing bingo, the main reason being that it is literally impossible to chase losses. On a really bad night, if one played every game with the maximum number of cards and one did not win a penny, one might be down by about £30 at the end of the evening. Participation in the game is also limited by the physical limits on how many cards can be played at one time.
On Tuesday night, I took advantage of the generosity of the Government Whips Office to visit the Gala club in Clapham, of which I am now a member.
It was my first attempt at playing the game, and I was told that seasoned players of bingo usually play with six cards in a single game. I soon discovered that I was unable


to keep up with the numbers being called, and I found myself trying to remember more and more numbers as I fell further and further behind. Happily, I was next to a lady who was managed to mark her own card and keep an eye on mine at the same time, and to tell me when I had missed a number.
I must pay tribute to the mental agility and skill of experienced players of bingo. I do not believe that Einstein could play more than perhaps two sets of six cards at a time, even if he were permitted to do so by the present law.
Despite those safeguards and the physical limitations, the bingo industry is governed by draconian rules and regulations ostensibly to protect the consumer. The Gaming Act 1968 introduced strict controls on hard gambling and was designed to prevent organised crime and the Mafia gaining control of casinos. However, by some curious accident of history, the Act was passed by Parliament in a form that restricted the bingo industry within the same framework. As a result, the bingo industry, which was described by the Royal Commission on gambling as
a pastime where people, mostly women and often the lonely or the elderly, can meet in a neighbourly way to enjoy an agreeable flutter
through the introduction of the 1968 Act, became a threat to the nation's moral and financial well-being which had to be contained within stringent and bureaucratic controls.
Having studied the restrictions, I am amazed that we still have a bingo industry in the United Kingdom. I shall give a few examples of the rules. If one decides that one would like to participate in a game of bingo—a decision which, under the terms of the 1968 Act, must be entirely unstimulated—one's first port of call may be the local or national newspapers. A bingo club can advertise in a local paper—but not a national one—and it can say that people may play bingo at that club. The advertisement can say how much it will cost to play bingo and the times at which people can play. However, the Gaming Act specifically prohibits any advertisement from telling people what they may win at the bingo club—a far cry from the national lottery.
If, as with a national game, an advertisement is placed in a national paper which says how much people can win, the Gaming Act states that the advertisement must not contain any information about where people can play the game. The Government's recent action to raise the limit on the maximum prize in the national game from £75,000 to £250,000 is extremely welcome. However, my hon. Friend the Minister will understand that its effect is blunted somewhat if the clubs cannot tell anyone where that prize may be won.
Perhaps the most ludicrous example of the restrictions on advertising that I have encountered so far involved a ruling that the Gaming Board told me about, whereby a club circulated information to its members telling them about prizes that were available in the club. That is permissible if the information is restricted only to the members of the club and it is not circulated more widely to non-members.
However, the club made the mistake of sending out the circular in a transparent wrapping. As a result, the name and location of the club and the amount of money that could be won there was visible through the wrapping. The Gaming Board ruled that that was a clear breach of the

rules and that the circular should be withdrawn because there was a real danger that the postman might be corrupted by reading it.
The strong competition for the population's limited amount of disposable income is ever increasing. The national lottery has had a severe impact. I support the national lottery, but we must recognise that it is having an effect on other forms of gambling. Attendance figures at bingo clubs on Saturday nights, especially during the rollover week, are ncticeably lower. The pools and premium bond companies—both of which, like the national lottery but not bingo, are open to 16-year-olds—also compete for people's leisure time and money. However, the national lottery, the pools and premium bonds—the chief competitors of the bingo industry—have been permitted to break away from the policy of satisfying unstimulated demand.
During the passage of the legislation which provided for the national lottery, it was recognised that its success would depend upon access to advertising. That has, in turn, led to the lifting of the pools advertising ban—a move that I support strongly. However, it is indefensible that bingo—the last remaining form of soft gambling that is governed by the restrictions—should not be able to benefit also from free access to advertising in all the available media.
Should one overcome the advertising problems and manage to find a suitable bingo club—perhaps on the recommendation of one's friends or by simply stumbling across it on the street—one will encounter a second problem. When I first visited the Colchesier Gala club, I expressed a wish to play a game. I was told that it was illegal for me to do so; it was quite all right for me to call out the numbers from the stage, but I would need to become a member if I wanted to play. That did not seem an insuperable obstacle; I said that I would be happy to become a member—particularly when I was told that it was free. However, I was then informed that, by law, my membership could not be granted for at least 24 hours. Apparently that is a cooling-off period during which people have time to reconsider their momentous decision to play a game of bingo.
That restriction has a severe impact in tourist resorts, as many people who visit bingo clubs may be staying in the area for only one or two days. As a result, large numbers of potential customers may be turned away. Some of the larger bingo clubs are able to reduce the impact of the rule, at least partially, by running a system whereby membership of one club within the group entitles a member to play at any of the other clubs within that group. However, that is a benefit which the smaller operator is unable to offer.
I find it difficult to understand why that period of reflection was thought necessary in 1968; in 1995 there can be no justification for it. With the exception of casinos, any member of the public has open access—subject to an age requirement—to all other forms of gaming, most of which have unlimited stakes. I invite the House to consider the impact on national lottery ticket sales if one had to give 24 hours notice of the intention to play.
Even if one manages to overcome all of the obstacles which Parliament has put in the way of people who wish to play bingo, one will still not be free of Government interference and regulation. Having found a bingo club, become a member and waited the all-important 24 hours


to reflect upon the morality of one's intentions, under the Gaming Act a person may still spend only £6.80 in any one session, including the entry fee. By law, the club must ensure that it does not take more than that permitted maximum from any one player.
Despite the fact that, in every other form of gaming in the United Kingdom, players can determine how much they wish to invest, if one is playing bingo the decision is not the individual's but that of the Gaming Board and of the Home Office. The clubs are even limited as to the amount to which they can boost the jackpot over and above the stake which the players have invested.
At any time those regulations would be regarded by all sensible people as archaic, unnecessary and anachronistic. With the advent of the national lottery, they pose a real danger to the survival of the bingo industry. I bring these matters to the attention of the House tonight in the interests of competition and justice. I have no interest to declare in the bingo industry, other than wishing to see an industry that now has to compete with the national lottery and the enhanced advertising capabilities of the pools given a fair chance.
The time for lengthy consultation has passed. The industry is falling into decline, which can be halted only by deregulation that will allow it to compete on a basis equal to that of its main competitors while it is still in good enough shape to take advantage of a level playing field. The Government have rightly championed competition and deregulation. No industry is more deserving of the chance to enjoy the benefits of those policies than the bingo industry. I ask my hon. Friend the Minister to give it that chance tonight by announcing his intention to deregulate the bingo industry.

Sir Mark Lennox-Boyd: I rise to speak briefly in support of my hon. Friend the Member for Colchester, South and Maldon (Mr. Whittingdale), who is to be commended for drawing a problem to the attention of the House and for clearly explaining in detail and with care the restrictions placed on a successful and so far profitable industry, which provides a public service to many people in different communities.
I imagine that all seaside towns have some form of bingo facility and that Plymouth is no exception, although I do not know of any bingo clubs there. I speak on behalf of the Gala bingo club in my constituency, which is an admirable organisation. I have visited it several times—most recently last year, when I was deeply impressed by the range and extent of its facilities. That bingo club comprises a large hall with capacity for up to 1,000 people. It is extremely well furnished, well lit and well decorated in the modern idiom. It has a pleasant bar and good food and dining refreshment facilities, and a dance floor. It offers all that one would expect for an evening's entertainment, including a cabaret and dancing.
That establishment is not a gambling den or primarily for gambling. It is primarily for social activities which include a flutter, as my hon. Friend so aptly put it. From information supplied by Bass, which owns the Gala chain, I understand that 65 per cent. of all bingo players, who number 3 million, play for pleasure rather to gamble. How

Bass defines that might be examined, but it makes the legitimate point that bingo is a social and not a gambling activity.
The Government last legislated to change the bingo industry regime in 1992, with the Bingo Bill. That introduced measures of a liberalising kind, to remove some of the regulatory burden on the industry, but by no means enough. As my hon. Friend said, much of that burden remains on the industry's shoulders. Remarkably, that modest lifting of the oppressive regime was considered sufficient when, only two years later, we were all talking about a national lottery—which we have now, with a vengeance. That shows how quickly social attitudes towards the morality of gambling change. As my hon. Friend said, it is absurd that bingo was left behind and not put on an equal footing with the industries with which it competes.
My hon. Friend used nearly every argument, but he omitted to mention that—as I was reliably informed—the odds in bingo of winning a modest prize are infinitely higher than the odds of winning a modest prize, let alone a jackpot prize, in the national lottery. I advocate bingo as a much more sensible form of flutter than the national lottery.
Bingo clubs are utterly respectable places of entertainment where one may find a coach party of middle-aged or elderly people, sometimes single lonely people and sometimes married couples who are there for social activity and human contact. Bingo provides a worthwhile social benefit as well as being a profitable industry for the 35,000 people whom it employs.
It is extraordinary that the Gala bingo club in my constituency cannot advertise saying, "Come to Gala on Saturday night for a dance, dinner and an evening out with a little bingo." But using the so-called inducement of an evening out, dancing, a cabaret and a meal to persuade the public to indulge in gambling is unlawful. That form of puritanism is absurd and bizarre in the current mores of our country. As my hon. Friend rightly said, it was probably absurd and bizarre even before the national lottery, but that has now exposed the folly of maintaining such restrictions.
I invite my hon. Friend the Minister and his Home Office colleagues urgently to examine that area of the law and to make changes as rapidly as possible. The national lottery, premium bonds, pools organisations and bingo should enjoy the same unrestricted ability to advertise. If I were in my hon. Friend's position, I would consider the bingo industry as part of the entertainment industry. It should be judged in that light: the gambling element—which of course is present—is incidental to bingo's major element of providing entertainment, and a legitimate and safe leisure activity for millions of people.

The Parliamentary Under-Secretary of State for the Home Department (Mr. Nicholas Baker): I welcome the initiative of my hon. Friend the Member for Colchester, South and Maldon (Mr. Whittingdale) in introducing this timely debate. His personal interest in deregulation is well known and he and my hon. Friend the Member for Morecambe and Lunesdale (Sir M. Lennox-Boyd) undertook personal researches that qualified them to speak authoritatively in the way that they did.
Commercial bingo, as played in bingo clubs throughout Britain, is a popular form of entertainment. There are more than 900 licensed bingo clubs in England, Wales and Scotland, and figures from the bingo industry suggest that every day, on average, about 500,000 people go to bingo clubs. Those players staked a total of £811 million in the year to August 1994. The industry's turnover is growing, and the money staked has increased by 31 per cent. since 1990.
Before the 1960s, commercial bingo—which used to be known as housey-housey in the Army and as lotto in homes throughout the country—and other forms of gaming were prohibited in law. The Betting and Gaming Act 1960 permitted gaming to be carried on as an activity of a club, and in so doing inadvertently allowed the introduction of commercial gaming. Large numbers of clubs sprang up offering bingo and casino gaming on a commercial basis. The new law was unclear and proved difficult to enforce; there was evidence that gamblers were being exploited, and there was criminal involvement in gaming.
The Gaming Act 1968 introduced the present system for the control and supervision of gaming. That legislation established the Gaming Board, which has wide powers to supervise commercial gaming and a general responsibility to keep the extent, character and location of gaming facilities under review. The 1968 Act applies a similar, although less rigorous, package of controls to bingo as to casino gaming. That regulatory system has been successful in ensuring that the bingo industry is stable and well run. The industry is generally free from criminal involvement and exploitation. Abuses are rare.
The system is also self-financing. The costs of regulation are offset by fees that the industry must pay for certificates from the Gaming Board and licences from the licensing justices.
That success, however, should not engender complacency. As my hon. Friends pointed out, the basic legislation governing bingo is now more than 25 years old. We must continue to ensure that the present controls are necessary, up to date and as effective as possible.
Hon. Members will be aware that we have been reviewing a number of restrictions on gambling as part of the Government's deregulation initiative. Some changes have already been made or are in hand. They include changes to the law on betting shops, lotteries, football pools and gaming machines. Bingo is not exempt from the review process. We have already made a number of changes to the law on bingo, and we have set out our plans for others. I should like briefly to outline some of them.
In 1992, we partially relaxed the ban on advertising bingo to allow some print advertising. Previously, the Gaming Act 1968 provided a general prohibition on the advertisement of any gaming premises or facilities. Earlier this year, we increased the maximum prize in the national bingo game from £75,000 to £250,000. The national game was introduced by the Gaming (Bingo) Act 1985 which the Government supported. It allows bingo clubs in Britain to join together to play multiple bingo.
In March this year, we published a consultation paper on gaming machines which has important implications for bingo clubs. At present, bingo clubs may offer either a number of £6 amusement-with-prizes machines, which pay out a maximum of £3 in cash or £6 in tokens, or two £200 jackpot machines. Under our proposals, bingo clubs would be allowed to offer a £10 all-cash amusement-with-prizes machine or up to four £200 jackpot machines.
We take the general view that traditional commercial bingo is towards the soft end of the gambling spectrum. It is a controlled form of gaming conducted in a social environment, and it was described aptly by my hon. Friend. Players' takes are low, the pace of proceedings is fairly contained and there are limited opportunities for participants to reinvest their winnings or chase their losses. The amount of money that operators may retain is strictly controlled. We believe that commercial bingo, as it is currently played, carries a low social risk. That is not to imply, however, that controls are unnecessary.
Like other forms of gambling, bingo is a cash-generating business. As such, it is particularly vulnerable to abuse by operators. Without effective regulation, there would be opportunities for unscrupulous operators to cream off money from participants which should be returned in winnings. We believe, therefore, that there will continue to be a need for controls to keep bingo free from criminal involvement and to protect participants from exploitation.
We are currently considering other aspects of the controls on bingo. They include the remaining restrictions on the advertising of bingo to which my hon. Friend referred. The partial relaxation of the ban on advertising bingo in 1992 did not allow the advertising of prize money or inducements to be linked to particular premises. There is a question of whether the remaining restrictions are necessary for the protection of the public. We hope to consult fairly soon on that and on broadcast advertising.
Another issue is the requirement that bingo halls must be run as clubs, with a 24-hour waiting period before new members are entitled to play. The 24-hour rule and club status are basic features of the system of regulation introduced by the Gaming Act 1968. We are considering whether commercial bingo requires that level of protection.
A further question is the duration of bingo gaming licences. At present, bingo operators must apply for a renewal of their bingo licences every year. We are considering whether such frequent renewal is necessary.
Those are just some of the issues that we are considering on bingo. The comments of my hon. Friends are particularly welcome and timely, and I can assure them that we shall take them most seriously in our considerations. Our thinking on those and other issues will emerge in due course.
I conclude by making it clear that important safeguards for players must be preserved. Nevertheless, there is a case for reviewing some of the present restrictions to ensure that the law does not place unnecessary restrictions on the many people who play bingo or on the industry which provides the facilities that so many people enjoy.
Question put and agreed to.
Adjourned accordingly at six minutes to Nine o'clock.